Shen­zhen and HK bourse link ap­proved

China Daily (USA) - - FRONT PAGE - By HU YONGQI in Bei­jing and DUAN TING in Hong Kong Cai Xiao con­trib­uted to this story. Con­tact the writ­ers at huy­ongqi@chi­nadaily.com.cn

The State Coun­cil has given the green light to a long-awaited plan to con­nect a sec­ond main­land stock ex­change with Hong Kong’s, fur­ther open­ing China’s cap­i­tal mar­ket.

“Prepa­ra­tion for the Shen­zhen-Hong Kong Stock Con­nect has been com­pleted and the State Coun­cil has ap­proved the im­ple­men­ta­tion plan for the pro­gram,” Premier Li Ke­qiang said on Tues­day at a State Coun­cil ex­ec­u­tive meet­ing over which he presided.

The move fol­lows the Shang­hai-Hong Kong Stock Con­nect, adopted in 2014, which Li said has achieved the goals en­vi­sioned and earned pos­i­tive feed­back.

The ad­di­tion of the Shen­zhen Stock Ex­change is a ma­jor step to­ward open­ing up the two main­land mar­kets, said financial ser­vice ex­perts. The ap­proval also shows the cen­tral gov­ern­ment’s sup­port for Hong Kong’s econ­omy, said Liu Jipeng, se­nior re­searcher at the China Univer­sity of Po­lit­i­cal Science and Law.

China’s top se­cu­ri­ties reg­u­la­tor said in a state­ment on Tues­day evening that the over­all trad­ing quota of 550 bil­lion yuan ($83 bil­lion) will be re­moved un­der both the Shang­hai and Shen­zhen stock trad­ing links with Hong Kong. The daily trad­ing quota will re­main, ac­cord­ing to the reg­u­la­tor.

Charles Li, chief ex­ec­u­tive of Hong Kong Ex­changes and Clear­ing Ltd, said at a news con­fer­ence that the move un­der­scores reg­u­la­tors’ con­fi­dence over the trad­ing links, and the scrap­ping of the in­vest­ment quota will help en­large trans­ac­tion vol­ume.

The con­nec­tion of the three ex­changes will help more do­mes­tic and in­ter­na­tional in­vestors use the Hong Kong mar­ket and in turn help China’s open­ing up of its whole cap­i­tal mar­ket, said Li Quan, CEO of Guok­ing (HK) Se­cu­ri­ties and Fu­tures.

At the State Coun­cil meet­ing, Li said, “Ini­ti­at­ing the Shen­zhen-Hong Kong Stock Con­nect, based on the suc­cess­ful pi­lot pro­gram of the Shang­hai-Hong Kong con­nect, marks another steady step to­ward build­ing a law reg­u­lated cap­i­tal mar­ket with in­ter­na­tional fea­tures and ren­ders pos­i­tive sig­nif­i­cance in many ar­eas.”

The premier also said the launch of the new con­nect would help in­vestors to bet­ter share the fruits of eco­nomic devel­op­ment on the Chi­nese main­land. In Hong Kong, it will help deepen the financial co­op­er­a­tion be­tween them and con­sol­i­date and boost Hong Kong’s po­si­tion as an in­ter­na­tional financial cen­ter, he said.

The new con­nect is mod­eled af­ter the Shang­hai-Hong Kong con­nect by which main­land in­vestors could buy Hong Kong stocks, and vice versa.

Trade vol­ume of the Shen­zhen Stock Ex­change reached 401 bil­lion yuan on Tues­day, mak­ing the over­all trade vol­ume of the main­land’s stock mar­ket more than 800 bil­lion yuan.

The con­nect is ex­pected to be launched be­fore late De­cem­ber, ac­cord­ing to Charles Li of Hong Kong Ex­change and Clear­ing. It will ben­e­fit Hong Kong’s stocks, which are un­der­val­ued, com­pared with those in Shen­zhen, said Den­nis Huang, se­nior real es­tate and financial com­men­ta­tor in Hong Kong.

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