China halts Bri­tish stock link over po­lit­i­cal ten­sions

The Punch - - INTERNATIO­NAL BUSINESS -

CHINA has tem­po­rar­ily blocked planned cross­bor­der list­ings be­tween the shanghai and lon­don stock ex­changes be­cause of po­lit­i­cal ten­sions with Bri­tain, five sources told Reuters.

sus­pend­ing the shang­hailon­don stock Con­nect scheme casts a shadow over the fu­ture of a project meant to build ties be­tween Bri­tain and China, help Chi­nese firms ex­pand their in­vestor base and give main­land in­vestors ac­cess to Uk-listed com­pa­nies.

The sources, who in­clude public of­fi­cials and peo­ple work­ing on po­ten­tial shanghai-lon­don deals, all said that pol­i­tics was be­hind the sus­pen­sion.

Two of them high­lighted Bri­tain’s stance over the hong kong protests and one pointed to re­marks over the de­ten­tion of a now for­mer staff mem­ber at its con­sulate in hong kong.

All five sources have been in­volved in talks with Chi­nese of­fi­cials and spoke to Reuters on con­di­tion of anonymity be­cause they are not au­tho­rized to speak about the mat­ter pub­licly.

Bri­tish com­pa­nies and banks in­volved in the scheme are watch­ing closely how re­cently-elected Prime Min­is­ter Boris John­son ap­proaches re­la­tions with Bei­jing and what stance he takes on hong kong, which has been roiled by protests.

China blames the hong kong un­rest, heav­ily sup­ported by an antigov­ern­ment move­ment seek­ing to curb con­trols by Bei­jing, on in­ter­fer­ence by for­eign gov­ern­ments in­clud­ing the United states and Bri­tain.

The China se­cu­ri­ties Reg­u­la­tory Com­mis­sion and the shanghai stock ex­change did not re­spond to re­quests for com­ment. A spokesper­son for the lon­don stock ex­change and a spokes­woman for the UK’S fi­nance min­istry de­clined to com­ment.

China’s Min­istry of For­eign Af­fairs said in a faxed state­ment that it is not aware of the specifics, but added that it “hopes the Uk can pro­vide a fair and un­bi­ased busi­ness en­vi­ron­ment for Chi­nese com­pa­nies that in­vest in the Uk and cre­ate the ap­pro­pri­ate con­di­tions for both coun­tries to carry out prac­ti­cal co­op­er­a­tion smoothly in var­i­ous fields”.

stock Con­nect, which be­gan op­er­at­ing last year, was de­vised as a way of im­prov­ing Bri­tain’s re­la­tion­ship with the world’s sec­ond big­gest econ­omy and was seen as a ma­jor step by China to open up its cap­i­tal mar­kets as well as link­ing them glob­ally.

hu­atai se­cu­ri­ties was the first Chi­nese com­pany to use the scheme in May, with SDIC Power set to be­come the sec­ond in De­cem­ber with a list­ing of global de­pos­i­tory re­ceipts in lon­don rep­re­sent­ing 10 per cent of its share cap­i­tal.

how­ever, the al­ter­na­tive en­ergy op­er­a­tor’s deal was post­poned at an ad­vanced stage, with SDIC Power cit­ing mar­ket con­di­tions as the main rea­son.

Five sources told Reuters SDIC Power’s deal was halted be­cause of Bei­jing’s sus­pen­sion of stock Con­nect.

other hope­fuls such as China Pa­cific In­surance, which one of the sources said could have launched a deal as early as the first quar­ter of 2020, have also been told to put their cross-bor­der list­ing plans on ice, they added.

SDIC Power and China Pa­cific In­surance did not re­spond to re­quests for com­ment.

“It’s not only a big blow to the com­pa­nies look­ing to broaden the in­vestor base via list­ings in lon­don, but also to China’s links with global mar­kets,” one source, who has worked on one of the GDR deals, told Reuters.

Trou­ble with the scheme comes at a bad time for Bri­tain, which is keen to build ties with non-euro­pean Union coun­tries as it pre­pares to leave the bloc, and the lse.

The lon­don ex­change was set for its worst year in terms of new list­ings in a decade as of Dec. 4, Refini­tiv data showed, with po­lit­i­cal volatil­ity and con­cerns over Bri­tain’s eu di­vorce crimp­ing stock mar­ket fundrais­ings.

•Em­ploy­ees car­ry­ing ban­ners in­form­ing cus­tomers about the ban on free sin­gle-use plas­tic bags at a shop­ping mall in down­town Bangkok ...on Thurs­day. Photo: AFP

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