On June 28, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission decided to approve the exchanges of the two places to officially incorporate the qualified trading open-end funds (hereinafter collectively referred to as "ETFs") into the trading interconnection mechanism between the mainland and Hong Kong stock markets, which means that the countdown to the inclusion of ETFs in the interconnection officially began. Previously, the Shanghai and Shenzhen Stock Exchange has issued relevant business rules to clarify the ETF inclusion conditions, adjustment mechanism, trading arrangements and other matters, laying a good institutional foundation for ETF trading under interconnection. At present, the list of the first batch of ETFs that can bid has been released, including 53 Shanghai Stock connect ETFs, 30 Shenzhen Stock connect ETFs and 4 Hong Kong stock connect ETFs. In recent years, the CSRC has orderly promoted the interconnection of financial markets and infrastructure between the mainland and Hong Kong, and launched the Shanghai Hong Kong connect and Shenzhen Hong Kong connect mechanisms in 2014 and 2016 respectively, creating a new model of cross-border investment. By the end of May this year, the total net inflow of funds from Shanghai and Shenzhen Stock connect was about 1.6 trillion yuan, and the total net inflow of funds from Hong Kong stock connect was about 2trillion yuan. It has played a positive role in attracting long-term overseas funds to the market, improving market structure and ecology, and promoting cross-border regulatory law enforcement and risk prevention capabilities. The inclusion of ETF is undoubtedly another landmark event in accelerating the high-level two-way opening of the capital market, deepening interconnection and optimizing the Shanghai Shenzhen Hong Kong connect mechanism, which has multiple meanings for the further development of China's capital market. First, it can further enrich the variety of transactions and provide more investment convenience and opportunities for domestic and foreign investors. For domestic investors, the inclusion of ETF products in the Hong Kong market provides investors with more choices for their growing demand for cross-border asset allocation; For overseas investors, overseas investors can give them more opportunities to directly share the development achievements of A-share listed companies by directly investing in A-share ETF products through Hong Kong. At the same time, compared with investing in a single stock, ETF, as a collection of a package of stocks, has the characteristics of low cost, high efficiency and high transparency, which can effectively disperse the risk exposure of individual stocks, and is more in line with the relatively stable investment needs of most individual investors. Second, it can promote the high-quality development of ETF markets and asset management industries in both places. China's ETF market has developed rapidly in recent years, but compared with mature markets such as Europe and the United States, the proportion of mainland and Hong Kong ETFs in global ETF assets is still relatively low. With more A-share ETF products entering the vision of overseas investors in the future, it will help to enhance the activity of the ETF market, expand the asset management scale of the ETF market, and promote the further optimization and improvement of relevant market mechanisms. At the same time, in the process of increasing ETF demand, it will also bring new opportunities to asset managers in both places, which will be conducive to expanding the international business of fund companies and cultivating cross-border service capabilities. In the future, whose products are more reasonable, whose services are more comprehensive, and whose performance is better will win the favor of more investors. Third, it is conducive to promoting the two-way opening of the capital market and helping China's economic transformation and upgrading. At present, interconnection has become one of the main ways for foreign investors to allocate a shares and mainland investors to allocate Hong Kong shares. The inclusion of ETFs this time has expanded the scope of investment, which will introduce more "living water" into the capital markets of the mainland and Hong Kong, and will actively promote the two-way opening and steady development of the capital markets of the two places. More importantly, as various industry themed ETFs gradually enter the vision of overseas investors, they will better reflect the development logic and context of the domestic real economy, give overseas investors more opportunities to tap China's high-quality enterprises, and thus support the development of enterprises with potential and core competitiveness. At the same time, foreign capital, mainly institutional investors, can further improve the investor structure of the A-share market, better adhere to the concept of long-term investment and value investment, and bring more long-term funds to China's economic transformation and upgrading. (Xinhua News Agency)