Markets
What is the Shanghai-Hong Kong Stock Connect?
What is the Shanghai-Hong Kong Stock Connect?
On November 17th, the long awaited Shanghai-Hong Kong Stock Connect launched, connecting Mainland China’s capital markets with Hong Kong in a way never seen before.
Before the new investment channel link, individual investors could only participate indirectly in financial securities in the Mainland, such as specific funds and ETFs. The Shanghai-Hong Kong Stock Connect, however, now allows investors to trade securities in a range of listed stocks in each both markets through their respective securities companies. This helps to promote and strengthen the connection between the two markets.
There is still a big disconnect between dual-listed companies traded in both Shanghai and Hong Kong. Some expected deeply discounted shares trading in Hong Kong to converge with their corresponding values on the Mainland. However, it is also true that shares are not directly fungible, which means that arbitrage is not possible.
It is expected that the Shenzhen Exchange will follow suit in the future if the Stock Connect is deemed successful. With all three merged, it would create the 2nd largest exchange in the world with a market capitalization of $7.5 trillion. While not yet passing the NYSE in value, the combined exchange would be bigger than the NASDAQ which has a market capitalization of $7.3 trillion.
Original graphic from: Goldman Sachs
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U.S. Debt Interest Payments Reach $1 Trillion
U.S. debt interest payments have surged past the $1 trillion dollar mark, amid high interest rates and an ever-expanding debt burden.
U.S. Debt Interest Payments Reach $1 Trillion
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The cost of paying for America’s national debt crossed the $1 trillion dollar mark in 2023, driven by high interest rates and a record $34 trillion mountain of debt.
Over the last decade, U.S. debt interest payments have more than doubled amid vast government spending during the pandemic crisis. As debt payments continue to soar, the Congressional Budget Office (CBO) reported that debt servicing costs surpassed defense spending for the first time ever this year.
This graphic shows the sharp rise in U.S. debt payments, based on data from the Federal Reserve.
A $1 Trillion Interest Bill, and Growing
Below, we show how U.S. debt interest payments have risen at a faster pace than at another time in modern history:
| Date | Interest Payments | U.S. National Debt |
|---|---|---|
| 2023 | $1.0T | $34.0T |
| 2022 | $830B | $31.4T |
| 2021 | $612B | $29.6T |
| 2020 | $518B | $27.7T |
| 2019 | $564B | $23.2T |
| 2018 | $571B | $22.0T |
| 2017 | $493B | $20.5T |
| 2016 | $460B | $20.0T |
| 2015 | $435B | $18.9T |
| 2014 | $442B | $18.1T |
| 2013 | $425B | $17.2T |
| 2012 | $417B | $16.4T |
| 2011 | $433B | $15.2T |
| 2010 | $400B | $14.0T |
| 2009 | $354B | $12.3T |
| 2008 | $380B | $10.7T |
| 2007 | $414B | $9.2T |
| 2006 | $387B | $8.7T |
| 2005 | $355B | $8.2T |
| 2004 | $318B | $7.6T |
| 2003 | $294B | $7.0T |
| 2002 | $298B | $6.4T |
| 2001 | $318B | $5.9T |
| 2000 | $353B | $5.7T |
| 1999 | $353B | $5.8T |
| 1998 | $360B | $5.6T |
| 1997 | $368B | $5.5T |
| 1996 | $362B | $5.3T |
| 1995 | $357B | $5.0T |
| 1994 | $334B | $4.8T |
| 1993 | $311B | $4.5T |
| 1992 | $306B | $4.2T |
| 1991 | $308B | $3.8T |
| 1990 | $298B | $3.4T |
| 1989 | $275B | $3.0T |
| 1988 | $254B | $2.7T |
| 1987 | $240B | $2.4T |
| 1986 | $225B | $2.2T |
| 1985 | $219B | $1.9T |
| 1984 | $205B | $1.7T |
| 1983 | $176B | $1.4T |
| 1982 | $157B | $1.2T |
| 1981 | $142B | $1.0T |
| 1980 | $113B | $930.2B |
| 1979 | $96B | $845.1B |
| 1978 | $84B | $789.2B |
| 1977 | $69B | $718.9B |
| 1976 | $61B | $653.5B |
| 1975 | $55B | $576.6B |
| 1974 | $50B | $492.7B |
| 1973 | $45B | $469.1B |
| 1972 | $39B | $448.5B |
| 1971 | $36B | $424.1B |
| 1970 | $35B | $389.2B |
| 1969 | $30B | $368.2B |
| 1968 | $25B | $358.0B |
| 1967 | $23B | $344.7B |
| 1966 | $21B | $329.3B |
Interest payments represent seasonally adjusted annual rate at the end of Q4.
At current rates, the U.S. national debt is growing by a remarkable $1 trillion about every 100 days, equal to roughly $3.6 trillion per year.
As the national debt has ballooned, debt payments even exceeded Medicaid outlays in 2023—one of the government’s largest expenditures. On average, the U.S. spent more than $2 billion per day on interest costs last year. Going further, the U.S. government is projected to spend a historic $12.4 trillion on interest payments over the next decade, averaging about $37,100 per American.
Exacerbating matters is that the U.S. is running a steep deficit, which stood at $1.1 trillion for the first six months of fiscal 2024. This has accelerated due to the 43% increase in debt servicing costs along with a $31 billion dollar increase in defense spending from a year earlier. Additionally, a $30 billion increase in funding for the Federal Deposit Insurance Corporation in light of the regional banking crisis last year was a major contributor to the deficit increase.
Overall, the CBO forecasts that roughly 75% of the federal deficit’s increase will be due to interest costs by 2034.
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