Hong Kong Exchanges and Clearing (HKEX) expects its ETF market to keep growing after record turnover and new listings this year. Daily turnover in ETFs doubled to HK$37.8 billion in the first nine months, drawing investors from mainland China, Asia, Middle East, and Europe.

ETFs are listed index funds tracking stock or bond performance, trading throughout the day like a stock. Hong Kong is now the world’s third largest ETF market, behind mainland China and the US. Connectivity is crucial for market growth, says HKEX executive.

Cross-border ETF Connect has allowed international investors to trade 273 ETFs in Shanghai and Shenzhen, with mainland investors accessing 17 ETFs in Hong Kong. Global investors use ETFs for quick access to mainland and Hong Kong stocks, with the Hang Seng Index up 35% in the first nine months.

Mainlanders traded HK$4.2 billion in ETFs daily in Hong Kong via the connect scheme, up 128%. Trading in mainland ETFs by international investors rose 142% to 3.2 billion yuan daily. HKEX added 41 ETF listings in the first nine months, surpassing last year’s total.

Improved market structure and introduction of market makers in trading sessions have boosted ETF trading. HKEX now offers 13 virtual-asset ETFs from seven issuers. The city’s ETF market is set to grow with more connectivity and innovative products, attracting investors from the region.

HKEX has 21 income ETFs paying a dividend yield above 4%. Daily turnover for these reached HK$206.6 million in the first nine months, seven times the volume a year earlier. The ETF landscape is competitive, requiring continued innovation in Hong Kong’s international financial center.

Read more at Yahoo Finance: Hong Kong exchange sees further growth ahead for record-setting ETF market