CITIC Securities predicts that the China Securities Regulatory Commission’s crackdown on cross-border stock trading will impact up to 250 billion in Hong Kong assets

The China Securities Regulatory Commission announced last Friday (the 22nd) that it will “fully crack down” on illegal cross-border stock trading within two years, and will impose penalties on internet brokerages such as Futu and Tiger.

In a report, CITIC Securities estimated that the asset size expected to be affected by China’s latest crackdown on illegal cross-border securities is roughly between 200 billion and 250 billion yuan. This figure does not correspond to the size of Hong Kong stock holdings, nor can it be simply equated with selling orders in Hong Kong stocks; the short-term impact on liquidity in the Hong Kong stock market is controllable.

The firm’s analyst noted that this figure was derived by calculating based on the latest disclosed data from the two institutions being targeted—Futu Holdings and Tiger Securities. Considering the diversification of asset types and the pace of clearing over two years, the actual sell-off of Hong Kong stocks is significantly lower than the total-figure scope, and the short-term impact is expected to be controllable.

The analyst said that, on the one hand, assets in offshore accounts include multiple types such as Hong Kong stocks, cash, money market funds, fund products, and options; on the other hand, even if Hong Kong stock holdings need to be disposed of, it will be carried out gradually in the course of the two-year concentrated rectification period using a “sell only, no buy-in” approach, rather than forcing liquidation all at once.

CITIC Securities believes that, against the backdrop of continued improvement in China’s domestic secondary market, leading brokerages and wealth management platforms with strong client asset bases, sufficient reserves of cross-border products, and leading investment advisory and digital capabilities are expected to benefit.