Hong Kong will oversee scheme to control risk
Print Edition
CHINA yesterday unveiled a plan allowing cross-trading between the Hong Kong and Shanghai’s stock markets, in the latest move to open up its capital markets and promote the yuan as an international currency.
The pilot program is expected to be launched in six months to offer investors from China’s mainland direct access to invest in selected companies listed on the Hong Kong exchange and to enable Hong Kong investors to trade shares of designated Shanghai-listed companies.
In a joint statement, the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission said the program will boost the attractiveness of both markets to international investors and consolidate the two cities’ roles as financial centers.
“It is an important step in the opening up of China’s capital market and will enhance capital market connectivity between the mainland and Hong Kong,” the statement said.
The program will also promote the internationalization of the Chinese currency and development of Hong Kong as an offshore yuan business center, as mainland investors can participate in the Hong Kong stock market using yuan, it said.
Premier Li Keqiang said at the Boao Forum for Asia that the plan “will enable us to expand market access, foster a better business environment to unleash greater dividends of reform, spark social creativity and stabilize market expectations.”
Under the program, cross-border investment would be subject to quotas.
Hong Kong investment in the mainland market will be limited to an aggregate quota of 300 billion yuan (US$49.2 billion) and a daily quota of 13 billion yuan. Mainland investment in Hong Kong stocks will be limited to an aggregate quota of 250 billion yuan and a daily quota of 10.5 billion yuan.
The trial will be limited to companies dual-listed in Shanghai and Hong Kong exchanges as well as blue-chip companies tracked by the SSE 180 Index, SSE 380 Index, the Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap Index.
For mainland investment in Hong Kong stocks, the trial is only open to institutional investors and individual investors with asset of no less than 500,000 yuan (US$81,967). There is no threshold for investors in Hong Kong.
Chow Chung-kong, chairman of the Hong Kong Exchange, said 266 Hong Kong-listed shares would take part in the scheme, along with just over 560 stocks listed in Shanghai.
Hong Kong Chief Executive Leung Chun-ying said the scheme, intended to increase capital flow between the two markets, would be implemented with policies to control risks, AFP reported.
“The Hong Kong government will take an oversight role,” he told reporters. “It is important that, while we open up the two markets to the respective investors in these two markets, we pay due attention to the matter of investor protection.”
Market-watchers said that the deal represented progress towards making the yuan freely convertible since Chinese investors on the mainland will use currency in an offshore market.
“This is a step in China’s gradual liberalization of its capital account,” Jiang Shu, a foreign exchange analyst at Industrial Bank in Shanghai, told AFP.
“Authorities will definitely pay close attention to the capital flows between Shanghai and Hong Kong and introduce supporting regulatory measures.”
China keeps a tight control on its capital account — investment and financial transactions, rather than those related to trade — due to worries that unpredictable fund flows could harm the economy and reduce its control over it.
Peter Wong, deputy chairman of HSBC Corp Ltd, hailed the deal.
“The landmark agreement gives global investors greater access to China’s extraordinary growth story, and allows Chinese savers to diversify their holdings,” he said in a statement.
“This is further confirmation of China’s commitment to financial reform, and reaffirms Hong Kong’s role as the fulcrum of China’s broader economic integration with the global economy.”
Lu Wenjie, an equity strategist at UBS, said: “Although the mainland’s A-share market has been underperforming for years, some high-quality blue-chip shares are still quite appealing to Hong Kong investors who previously had no access to such opportunities.”
The allowing of mutual investment would improve the investor profile of the Shanghai exchange by bringing in Hong Kong investors who are more value-oriented, Lu said.
However, Lu noted it would take time for investors to become familiar with each other’s markets.
Plans for a similar tie-up in 2007 sparked a surge in share prices but were scrapped as the financial crisis unfolded.
The Shanghai Composite Index yesterday gained for a fourth day in a row.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
