Jury out on hedge fund take-up of Shanghai-HK Stock Connect

Funds prefer synthetic exposure over cash equities to access China

Logos for the Hong Kong and Shanghai stock exchanges

Hedge funds with exposure to China have concerns about the Shanghai-Hong Kong Stock Connect’s settlement and custody procedures, as well as regulatory issues, with some continuing to prefer synthetic products over cash equities.

The pilot programme for the Shanghai-Hong Kong Stock Connect officially launched in November 2014 with the goal of opening up China to foreign capital. Linking the Hong Kong and Shanghai stock markets, it allows investors in mainland China and Hong Kong to trade and settl