The Stock Connect program, designed to link the Hong Kong and mainland China stock markets, is still seeing a significant portion of its daily quota go unused. This situation persists despite the program’s intention to encourage greater cross-border investment flows.

Several factors contribute to this underutilization. Market volatility, particularly in mainland Chinese markets, has made investors more cautious. Regulatory uncertainties and concerns about policy changes also play a role in dampening enthusiasm for the Stock Connect program.

The ‘Northbound’ channel, which allows international investors to access mainland Chinese stocks through Hong Kong, has consistently seen lower quota usage compared to the ‘Southbound’ channel. This suggests that international investors are more hesitant to invest in mainland markets than mainland investors are to invest in Hong Kong.

Analysts suggest that increased market stability and greater regulatory clarity are needed to boost investor confidence and encourage fuller utilization of the Stock Connect quota. Further measures to promote the program and address investor concerns could also help to unlock its potential.