Roster for 2nd stock link out in May
Print Edition
CHINA will unveil a timetable for the launch of a trading link between the Shenzhen and Hong Kong stock bourses next month, UBS Securities said.
“To be kicked off in the second half of this year, the new link will offer foreign investors access to high-growth shares of Internet technology, advanced manufacturers and consumer staples,” Hou Yankun, head of China equity at UBS, said during a teleconference yesterday.
Hou said, without giving the source, Chinese mainland securities regulator may study two possible options for picking stocks to be traded through the Shenzhen-Hong Kong connect.
One option is to let overseas investors trade in stocks tracked by the Shenzhen 100 Index, the Shenzhen 300 Index and the CSI 300 Index. That would include 301 large-capitalized, profitable and highly liquid shares that account for 50 percent of the total capitalization on the Shenzhen exchange, Hou said.
The other option is to adopt the newly expanded Shenzhen Component Index, which includes 500 stocks that represent 60 percent of the total capitalization, he added.
Hou said the regulators may ease curbs, such as a requirement of at least 500,000 yuan (US$80,650) in portfolio for individual investors to take part in the link, in a bid to boost trading activity.
UBS, however, said the red-hot ChiNext board, a Nasdaq-style board of the Shenzhen exchange, won’t be available for trading under the link initially. The ChiNext has soared nearly 70 percent so far this year.
The brokerage also said the new link will start slowly, following the example set by the Shanghai-Hong Kong Stock Connect, which has seen investors not tapping most of the available quota since its launch last November.
“The high valuation of the Shenzhen market may deter foreign investors,” Hou said.
Currently, 15 of the 17 dual-listed shares in Shenzhen are traded at premiums to their Hong Kong-listed counterparts.
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