Recently, the Shanghai Stock Exchange ("SSE") and the Shenzhen Stock Exchange ("SZSE") have jointly distributed the Circular on Inclusion Arrangements for Eligible Securities under Stock Connect's Southbound Trading (the "Circular").
The stock exchanges announce that, beginning from this year's third quarter, they will adjust the scope of eligible securities for the Hang Seng composite index in Hong Kong that fall under special circumstances as mentioned in Article 55 of the Implementing Measures of the Shanghai Stock Exchange for the Shanghai-Hong Kong Stock Connect and Article 56 of the Implementing Measures of the Shenzhen Stock Exchange for the Shenzhen-Hong Kong Stock Connect (i.e. stocks falling under any other special circumstance specified by the SZSE will not be included into the range of stocks under the Southbound Trading). Therefore, the Circular expressly states that, from July 16, 2018, constituent stocks of the Hang Seng Composite LargeCap Index ("HSLI"), the Hang Seng Composite MidCap Index (HSMI) and the Hang Seng Composite SmallCap Index (HSSI) that are stocks offered by foreign companies, stapled securities, or stocks offered by companies with weighted voting rights (WVR) are temporarily excluded from the scope of eligible stocks under the Southbound trading of the Shanghai-Hong Kong Stock Connect and of the Shenzhen-Hong Kong Stock Connect, and the inclusion and exclusion of other stocks will continue as usual.