City tipped to gain from pilot program
Print Edition
A PILOT program that will allow equity investment between the Shanghai and Hong Kong bourses will likely benefit Shanghai more than Hong Kong because of greater interest from overseas investors, JPMorgan said yesterday.
The program, set to be launched in October, will allow institutional and individual investors on the mainland to trade Hong Kong shares without going through a qualified institutional investor. It will also open the A-share market to Hong Kong investors.
A threshold of 500,000 yuan (US$81,390) was set for individual investors.
“Southbound investments will be made mainly by the institutional investors while the northbound will involve wealthy individuals in Hong Kong and overseas,” said Zhu Haibin, chief China economist at JPMorgan. “The channel will also open investment options for foreign institutional investors when Qualified Foreign Institutional Investors and Renminbi QFII programs run out of new quotas.”
The yuan-denominated A-share market offers exclusive investment opportunities into Chinese companies in fast-growing sectors such as medical services, consumer goods, brokerage and raw materials for electronic industries, Zhu said.
The program is seen as an effort to open up China’s strictly controlled capital account and create more investment options using the local currency yuan.
The Shenzhen bourse is also considering launching a cross-border investment program with the Hong Kong stock exchange.
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