China Shuts ‘Fake’ Foreign Investors out of Stock Connect Program

China’s securities regulator is plugging the loophole to cut off “fake foreign capital” by banning mainland investors from trading onshore shares via the stock connect programs with Hong Kong.

Starting July 24, mainland investors with Hong Kong accounts will be fully banned from buying A shares through the northbound trading links, after the expiration of a one-year grace period.

The China Securities Regulatory Commission in July 2022 issued a policy to prohibit brokerage firms in Hong Kong to open stock trading accounts for mainland investors, in a bid to crack down on what the regulator deems “fake foreign capital.” A one-year grace period was given to allow existing investors to continue trading.