Data covering the first seven months of 2026 reveals that average daily turnover for northbound ETFs reached RMB 5.1 billion, marking a substantial 50% increase compared to the full-year average recorded in 2025.

Since the inclusion of ETFs in the Stock Connect programme in July 2022, the initiative has experienced significant growth across product scope, trading activity, and investor engagement. Reflecting this momentum, average daily turnover for northbound and southbound ETFs in the January-to-July period hit RMB 5.1 billion and HKD 5.8 billion respectively, representing year-on-year increases of 50% and 48.7%.

Eligibility Criteria Widened, Driving Increased Activity

The ongoing expansion of eligible ETF products stands as a crucial indicator of the programme's maturation. Following the China Securities Regulatory Commission's announcement of "five measures" in April 2024 and the subsequent relaxation of inclusion criteria in July of the same year, the number of eligible ETFs under Stock Connect has grown impressively. By the end of June 2026, this figure had reached 396, a substantial jump from the initial 87 ETFs available at launch.

Investment Themes Broaden Beyond Traditional Sectors

The widening scope of eligible ETFs has brought greater diversity to both asset classes and investment themes. For northbound ETFs, technology-focused products have maintained a dominant position since inception. Additionally, thematic ETFs covering healthcare, consumer goods, energy, and raw materials have been progressively added, offering international investors a richer selection of A-share market participation options. On the southbound side, product offerings now extend well beyond conventional Hong Kong broad-based indices, encompassing themes such as technology, biotechnology, high dividend yields, and cross-border asset allocation, thereby granting mainland investors enhanced access to Hong Kong and international markets through the Stock Connect channel.

"60/40 ETFs" Emerge as a Notable Development in Southbound Trading

A particularly noteworthy trend has been the rapid growth of "60/40 ETFs," which benefited from the revised inclusion criteria introduced in July 2024. These instruments may allocate up to 40% of their assets to international securities, enabling investors to combine Hong Kong market exposure with broader global themes. Hong Kong currently hosts 20 such ETFs with a combined AUM of HKD 11.5 billion, posting an average daily turnover of HKD 105 million from the start of the year through July. Among these, seven have been incorporated into the southbound Stock Connect channel for mainland investors, holding combined AUM of HKD 6.2 billion as of the end of July 2026.

These "60/40 ETFs" span diverse areas including US and Korean technology sectors, artificial intelligence, and high-dividend companies, allowing mainland investors to participate in a wider array of international investment themes through the familiar trading mechanism of southbound ETFs.

Investor Base Diversifies and Deepens

Alongside product expansion, the composition of investors in the ETF Connect programme has grown increasingly varied. Mutual funds, funds of funds, wealth management platforms, and institutional investors are playing progressively larger roles, elevating ETF Connect from a straightforward trading link into a vital tool for institutions seeking to optimise portfolios and manage cross-border asset allocation. As ETF adoption continues to rise, income-oriented, active, and risk-management products are attracting growing interest. Investor demand is evolving from simple market tracking and asset allocation towards more sophisticated objectives including stable income generation, expressing investment views, and managing portfolio risk, reflecting the market's ongoing maturation.

As ETFs become more embedded in asset allocation and portfolio management strategies, demand for complementary risk management tools such as futures and options is also strengthening, enabling investors to coordinate investment, trading, and risk mitigation within a unified market ecosystem. Looking ahead, the development of ETF Connect is anticipated to encompass not only further growth in product numbers and market size but also the attraction of a broader spectrum of participants. In August 2026, the National Financial Regulatory Administration announced that mainland insurance funds may invest in Hong Kong-listed ETFs through the southbound channel. This policy change is expected to diversify the southbound investor base further, inject additional long-term capital into the market, enhance overall liquidity, and reinforce Hong Kong's position as a premier hub for cross-border asset allocation.