On July 4, the integration of ETF into the trading interconnection mechanism between the mainland and Hong Kong stock markets (hereinafter referred to as "interconnection") was officially launched. There are 53 ETF products included in Shanghai Hong Kong stock connect, 30 ETF products included in Shenzhen Hong Kong stock connect and 4 ETF products included in Hong Kong stock connect. "Bringing ETF into the interconnection, expanding the breadth and depth of the two markets, and realizing the further integration of the mainland and Hong Kong markets will contribute to the internationalization of China's capital market and the stable development of the Hong Kong market." Tian Lihui, Dean of the Financial Development Research Institute of Nankai University, told the reporter of Securities Daily that after the mainland ETF is included in the interconnection, enriching the varieties of foreign investment and improving its investment convenience will bring more incremental funds to the mainland ETF market, and the improvement of microstructure will also contribute to the healthy and stable development of the ETF market. At the same time, the purchase of Hong Kong stock connect ETF by mainland funds will also effectively help stabilize the Hong Kong stock market. More importantly, the inclusion of ETF in interconnection can also improve the attractiveness of RMB assets to foreign capital and help the internationalization of RMB. The total scale of 83 ETFs exceeds 670 billion yuan Chen Li, chief economist of Chuancai securities and director of the Research Institute, told the reporter of Securities Daily that the inclusion of ETF in the interconnection is to further deepen the reform of the original mechanism, which is conducive to promoting the common development of the mainland financial market and Hong Kong financial market. For the Hong Kong stock market, it currently carries the vast majority of domestic Internet enterprises and has strong vitality and investment value; For the A-share market, ETF interconnection provides a convenient channel for foreign investment in mainland assets, and is expected to attract more overseas funds to participate in it in the future. According to the statistics of wind information, as of July 1, the land stock connect (Shanghai Hong Kong connect + Shenzhen Hong Kong connect) included 83 ETFs, with a total scale of 674.63 billion yuan. The scale of 21 ETFs exceeded 10 billion yuan, of which Huaxia Shanghai Stock Exchange 50ETF ranked first with 52.270 billion yuan, followed by Huatai Bairui Shanghai Shenzhen 300etf and Nanfang China Securities Exchange 500etf, with the scale of 47.373 billion yuan and 42.251 billion yuan respectively. From the perspective of ETF types, the scale of 26 broad-based ETFs is 298.412 billion yuan, mainly including Shanghai and Shenzhen 300, China Securities 500 and gem index; There are 57 industry theme funds, with a total scale of 376.218 billion yuan, mainly for finance, consumption, medicine, new energy, chips, national defense and military industry, etc. Xu Meng, executive general manager of the quantitative investment department of Huaxia Fund, told the reporter of Securities Daily that the inclusion of ETF in the interconnection will further promote the development of the domestic ETF market. First, it will expand long-term overseas capital sources for the domestic ETF market, and the trading volume of domestic ETF and the proportion of overseas long-term allocation will gradually increase; Second, enhance the influence of domestic ETFs in the international capital market; Third, domestic investors may follow the northbound capital allocation of related ETFs; Fourth, further enhance the concentration of domestic ETF industry. Chen Li said that the 83 ETFs basically cover most industries in the market, and investors can choose according to their own investment preferences. With the improvement of relevant trading systems, it is expected that more different types of ETFs will be included in the interconnection in the future, further enriching the types of products that investors can choose. "After 83 ETFs in China are included in the interconnection, their liquidity and trading activity will increase, and the subscription scale of the primary market of ETFs is expected to expand." Tian Lihui said. ETF trading has two advantages Since the opening of Shanghai Hong Kong stock connect in 2014 and Shenzhen Hong Kong stock connect in 2016, the mechanism of Shanghai, Shenzhen and Hong Kong stocks has been continuously optimized and has become an important channel for northbound funds to invest in a shares. According to wind information data, as of July 3, 1527 land shares had passed the standard, with a total market value of 71.585 trillion yuan, accounting for 84.41% of the total market value of a shares, and the cumulative net purchase of northbound funds was 1.7 trillion yuan. Xu Meng said that compared with stocks, ETF trading under the interconnection mechanism has two major advantages: first, compared with individual stocks, ETF risks are dispersed, liquidity risks are small, and investment risks are low; Second, ETF is more transparent. Chen Li said that investing in stocks focuses more on micro factors, such as the company's financial situation, valuation, development prospects, etc., while ETF investment focuses more on macro or meso situations, such as investing in representative index ETFs such as Shanghai Stock Exchange 50ETF, Shanghai Stock Exchange 180etf, Shanghai Shenzhen 300etf, etc., and more on domestic macroeconomic conditions, while investing in ETFs such as chip ETF, food and beverage ETF, carbon neutral ETF, etc, We need to focus on the situation of the meso industry and judge the development prospect of the industry. "On the whole, compared with stock investment, ETF's overall risk is weaker than that of stocks due to the dispersion of its position targets. However, if ETF is subdivided, industry ETF's risk is higher than that of Index ETF because its constituent stocks are very concentrated in asset categories and industry categories. When there is risk in the industry, industry ETF may also face a larger pullback." Chen Li further said. For the future northbound capital preference, Xu Meng believes that its demand for the configuration of industry themed ETFs may be stronger than that of broad-based ETFs. The number of industry themed ETFs in the mainland is large and the liquidity is good. At the same time, there is no similar substitute in the Hong Kong market. Food and beverage ETF and new energy vehicle ETF are expected to be favored. Tian Lihui believes that under the interconnection mechanism, the international market will have a more significant impact on the mainland market. On the one hand, the value investment concept can be more respected, and the leading enterprises can get higher attention from the market; On the other hand, international market risks will also significantly spill over to the domestic market through interconnection channels. Therefore, in addition to analyzing individual stock issues and domestic economic and policy trends, investors should also pay attention to the international economic and financial situation. (Xinhua News Agency)