Hong Kong Exchanges and Clearing (HKEx) has found that the Shanghai Hong kong Stock Connect has actually been a success, trading-wise.
By formerly focusing on the ‘quota’ usage, a net figure composed of the difference between buy and sell orders, the percentage used of that quota appeared to be quite low. However, that number concealed the fact that the actual volumes of buy and sell trades was fairly busy – even if the differential between them was comparatively modest.
Last week, HKEx published an explanation of how to understand the numbers it publishes each day to illustrate activity in the Shanghai-Hong Kong Stock Connect.
The Daily Quota Balance is obtained by subtracting the amount of buy orders from the daily quota, then adding to that sum the number of sell trades.
HKEx defines this as the following sum (which might be expressed better with the inclusion of some brackets).
Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades
This means that the balance can be greater than 100% of the quota, which had been confusing people.
To calculate the usage of the daily quota, the buy trades are netted against the sell trades.
HKEx is producing daily statistics of Stock Connect usage which it is available at:-