In response to media enquiries about the daily quota balance under Shanghai-Hong Kong Stock Connect going above the daily quota, Hong Kong Exchanges and Clearing Limited (HKEx) wishes to explain how the quota balance is calculated.

The daily Northbound and Southbound quota balances are calculated on a netting basis according to the following equation:

Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades

Taking today as an example: At 12 noon today in Hong Kong, the Northbound buy order value reached RMB2.548 billion while the sell trade value stood at RMB2.824 billion. Therefore:

Daily Quota Balance = RMB13 billion – RMB2.548 billion + RMB2.824 billion  = RMB 13.276 billion

The daily quota balance of RMB13.276 billion at 12 noon was greater than the daily Northbound quota of RMB13 billion, therefore the percentage of the daily quota balance was 102 per cent. Despite the quota balance going above 100 per cent at noon today, the total Northbound trading turnover at that time was RMB5.197 billion.

HKEx wishes to also remind market participants that because the quota is calculated on a netting basis, trading turnover through the link can substantially exceed the daily quota used. For example, here are the Northbound trading statistics from Monday, 1 December 2014:

While turnover on 1 December reached RMB6.257 billion, only RMB1.398 billion of the Northbound quota was utilised because of the nearly equal buy and sell trade value on that day.

Since the launch of Shanghai-Hong Kong Stock Connect on 17 November, total Northbound trade value has exceeded the daily quota usage on all days except for two (17 November and 24 November).

Trading turnover on Shanghai-Hong Kong Stock Connect is published each day at this link: http://www.hkex.com.hk/eng/csm/chinaconndstat.asp?langcode=en

More details on the stock connect scheme can be found at http://www.hkex.com.hk/chinaconnect

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