Shanghai and Shenzhen stock exchanges plan to list the first cross-border exchange traded fund focusing on companies in Hong Kong next year as investor appetite in mainland China broadens.

“Investors are looking for diversification from the Asia market and want to gain exposure to a basket of underlying Hong Kong stocks”, said Julia Leung, Hong Kong undersecretary for financial services and treasury. The Hong Kong stock exchange which lists Hong Kong, Chinese and international companies, will provide this, she added.

The ETF provider, which will be based in mainland China, is still to be determined. Talks are still under way with regulators and the stock exchanges are currently adjusting their systems for the cross-border clearing and settlement of stocks, said Ms Leung.