Introduction
Since its launch in 2022, Southbound ETF Connect has gained traction as a gateway for mainland investors seeking offshore exposure through Hong Kong-listed ETFs. The average daily turnover of ETFs within Southbound Stock Connect reached HKD 5.8 billion in the first seven months of 2026, up 48.7% compared with full-year 2025.
In 2024, the framework underwent a major expansion to allow up to 40% exposure outside Stock Connect. The emergence of a new product category, known as “60/40 ETFs,” is one of the most notable product developments enabled by the expanded ETF Connect framework. These ETFs typically maintain at least 60% exposure to Hong Kong-listed securities while allocating up to 40% to overseas assets, creating a structure that can satisfy ETF Connect requirements while introducing access to broader international markets.
The early growth of this category highlights its relevance within the ETF market. As of Aug. 31, 2026, there were seven Southbound-eligible 60/40 ETFs, with combined assets under management (AUM) of approximately HKD 6 billion since March 2025 and approximately HKD 1.3 billion in YTD inflows in 2026. This suggests meaningful investor demand for products that combine a Hong Kong core with international exposure.
The early growth of this category highlights its relevance within the ETF market. As of Aug. 31, 2026, there were seven Southbound-eligible 60/40 ETFs, with combined assets under management (AUM) of approximately HKD 6 billion since March 2025 and approximately HKD 1.3 billion in YTD inflows in 2026. This suggests meaningful investor demand for products that combine a Hong Kong core with international exposure.
The 60/40 framework has three key attributes.
- An alternative channel to access international markets
- A broader opportunity set
- Potential for greater risk diversification
An Alternative Channel to Access International Markets
ETF Connect provides a complement to the qualified domestic institutional investor (QDII) program. While QDII remains a key channel for offshore allocation, quota availability and product approval cycles can limit the pace of new overseas ETF launches. ETF Connect offers an additional route by allowing eligible Hong Kong-listed ETFs to be distributed to mainland investors under the Connect framework. This is particularly relevant as mainland investors continue to seek diversified exposure beyond domestic equities.
