The Hong Kong Stock Exchange has implemented its regular quarterly adjustment to the Stock Connect program’s eligible securities list, with changes effective June 17, 2025. Notably, logistics real estate firm ESR Group Limited (1821.HK) has been removed from the Southbound trading eligibility list.
Key Implications of the Adjustment
The exclusion of ESR means:
- Mainland investors can no longer purchase ESR shares through the Southbound Stock Connect mechanism
- Existing positions remain tradable but no new buy orders permitted
- ESR retains its primary listing status on the HKEX main board
Selection Criteria and Potential Reasons
Stocks typically face removal from the Stock Connect program when they:
- Fall below minimum average market capitalization requirements (HK$5 billion)
- Experience insufficient trading volume (less than HK$60 million turnover in past 12 months)
- Fail to meet free float percentage thresholds
- Face regulatory or compliance issues
While the exchange didn’t specify ESR’s removal reason, market analysts note the company’s market cap had hovered near the threshold level following sector-wide REIT valuation pressures.
Sector Impact and Investor Considerations
The adjustment particularly affects mainland investors seeking Asia-Pacific logistics real estate exposure. ESR’s removal leaves Goodman Group (through its Hong Kong depositary receipts) as the only major logistics-focused REIT remaining in the Southbound program.
Market participants should note the next quarterly review will occur in September 2025, with potential additions of newly qualified stocks that meet the program’s evolving financial and liquidity requirements. The Hong Kong exchange continues to expand Stock Connect’s product coverage, having recently added several biotechnology stocks in the previous adjustment cycle.
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