Economy Hong Kong, Shanghai stock link to start November 17

Hong Kong, Shanghai stock link to start November 17

Chinese Premier Li Keqiang
Chinese Premier Li Keqiang

A delayed trading link between Hong Kong and Shanghai’s stock exchanges will start on November 17, the Hong Kong exchange announced Monday.

The bourse connection — which is expected to allow the equivalent of US$3.8 billion a day in cross-border transactions — had originally been slated for last month, but was unexpectedly delayed as pro-democracy protesters continued to shut down sections of Hong Kong.

The link-up is seen as a key step towards greater financial liberalisation in the world’s second largest economy.

“The SFC and the CSRC jointly announced today that the launch of Shanghai-Hong Kong Stock Connect on 17 November 2014 … has been approved,” said a statement issued by the Hong Kong Stock Exchange (HKEX) early Monday.

The SFC is Hong Kong’s Securities and Futures Commission (SFC), and the CSRC is the China Securities Regulatory Commission.

The “Shanghai-Hong Kong Stock Connect” platform will allow international investors to trade selected stocks on Shanghai’s tightly-restricted exchange and let mainland investors buy shares in Hong Kong.

It is expected to see volumes on both exchanges rise significantly, particularly Shanghai, but is subject to strict limits in order to preserve capital controls in China, where Communist authorities keep a tight grip on the yuan currency.

Hong Kong’s embattled chief executive Leung Chun-ying had met with China’s President Xi Jinping in Beijing on Sunday as the city hosts the Asia Pacific Economic Cooperation (APEC) summit. 

Leung said that he had asked Xi for the stock connect to be implemented “as soon as possible”.

China’s official news agency Xinhua said Xi had backed Hong Kong authorities’ “efforts to safeguard the rule of law and maintain social order” in his meeting with Leung.

Thousands of protesters have taken to the streets of Hong Kong since September in fury at Beijing’s insistence that candidates running in the city’s 2017 leadership election are screened by a loyalist committee, an arrangement critics have branded “fake democracy”.

The protesters have also called for Leung to step down.

Media reports last month also said that the Asia Securities Industry and Financial Markets Association (ASIFMA), representing some of the world’s biggest banks and asset managers, had written to Hong Kong regulators asking for a delay because of uncertainty over the scheme’s rules.

China’s premier Li Keqiang announced plans for the project in April and it had been expected to launch six months later.

Plans for a similar tie-up in 2007 sparked a surge in share prices in both bourses, but they were eventually scrapped as the global financial crisis unfolded.

 

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