Richard Byworth, managing partner at SyzCapital, has sparked rumors suggesting that Hong Kong-listed Bitcoin ETFs may soon be available to investors from mainland China. Byworth's remarks to X, formerly known as Twitter, highlight ongoing discussions about the possibility of integrating these ETFs into the Stock Connect system. This integration could pave the way for a massive wave of capital flow from the mainland into these digital asset funds.
Beworth advertiser“I've just returned from Hong Kong. There's talk about possibly adding an ETF to Stock Connect. The implications of that are absolutely massive (basically meaning mainland money could buy them).” The statement followed a dialogue initiated by Samson Mow, who Comment on the impressive initial performance of the ChinaAMC Bitcoin ETF, which raised $121 million on its first day of trading.
Will Hong Kong Bitcoin ETF Open to Mainland China?
Mo’s statement, “I think you guys should be a little more optimistic,” reflects an optimistic outlook on the future of Bitcoin ETFs in Hong Kong. Adding depth to the discussion, Brian Hongjong Baik, co-founder and COO of SmashFi, says, I expressed His views on the financial, social and economic drivers that could drive mainland Chinese interest towards Bitcoin ETFs in Hong Kong.
He highlighted the huge amount of Chinese wealth held in real estate, with nearly 100 million empty homes, noting the urgent need for alternative investment opportunities to stabilize the social and economic landscape. “It's only a matter of time. The Chinese Communist Party needs alternative assets to mitigate social unrest,” Paik stated.
Paik also addressed the widespread misconception that investors from mainland China are currently banned from investing in ETFs available on the Hong Kong Stock Exchange. He explained that several existing financial arrangements already facilitate the strong flow of mainland capital into Hong Kong markets.
The Shanghai-Hong Kong Stock Connect Program and the Shenzhen-Hong Kong Stock Connect Program are notable examples, allowing investors to trade stocks across borders, albeit regulated through a daily transaction quota.
Furthermore, the Qualified Domestic Institutional Investor (QDII) program allows Chinese institutional investors to participate in overseas markets, including markets based in Hong Kong. Additionally, Chinese residents have the option to invest through brokerage firms operating legally in both regions, navigating the complex regulatory landscape governing foreign investments.
Another critical framework, the Mutual Fund Recognition between Hong Kong and Mainland China, facilitates the distribution of eligible mutual funds in their respective markets through a streamlined approval process. According to Pike, excluding Bitcoin ETFs from these arrangements would likely spark significant discontent and could disrupt the investment landscape in both regions.
“These mechanisms make the Hong Kong stock market one of the most accessible offshore markets for Chinese investors, enhancing financial integration between the mainland and Hong Kong. He stated that the exclusion of the Bitcoin-only ETF would likely cause significant repercussions among institutional investors.” and individuals in both China and Hong Kong.
Notably, Singapore-based Matrixport had already forecast in mid-April that the approval and subsequent listing of Hong Kong-listed spot Bitcoin ETFs on Southbound Stock Connect could attract $25 billion in capital. This program facilitates up to 500 billion yuan ($70 billion) of transactions annually.
At press time, Bitcoin was trading at $64,172.
Featured image created with DALL·E, chart from TradingView.com
