China-UK stock market proves a ‘flop’

A FLAGSHIP scheme to forge closer links between Britain and China’s stock markets has been dubbed a ‘flop’ after UK firms shunned the initiative.

The London-Shanghai Connect scheme was four years in the making and was launched in June 2019 to encourage large Chinese and British companies to raise capital through listings on each other’s stock markets.

On its launch, then Chancellor Philip Hammond hailed the link-up as ‘a strong vote of confidence in the UK market’, adding: ‘Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia.’

The idea was to permit investors to trade across London and China’s time zones, allowing issuers from both markets to raise capital in the other. But just four Chinese companies have used the scheme, and there have been no British participants on the Shanghai Stock Exchange despite a wave of Covid emergency fundraisers this year.

Since its launch political tensions between the UK and China have risen.

One City source said: ‘This was supposed to be the centrepiece of a string of bilateral agreements, instead it’s been a flop.’

Andrew Monk, head of UK broker VSA Capital, which has operations in China, said: ‘I’m in favour of the idea, but why would UK companies want to list in Shanghai? Companies have proved this year they can raise money in London rapidly.’

Sources close to the London Stock Exchange said it had not expected huge numbers of listings as the scheme was focused on large companies.