'Through-train' plan expires
By Winny Wang |
January 16, 2010, Saturday
|
Print Edition
Print Edition
CHINA has scrapped a "through-train" proposal which allows mainland individuals to buy shares directly in Hong Kong's market.
The "through-train" plan expired, the State Administration of Foreign Exchange has said.
The central government in August 2007 announced a pilot program under which mainland residents with a Bank of China account in Tianjin would be allowed to buy Hong Kong stocks. It was aimed at channeling the country's rising foreign exchange reserves and boosting the Hong Kong stock market.
The announcement of the program spurred the Hang Seng Index to surge 55 percent in three months.
However, the pilot program's launch had been delayed after Chinese Premier Wen Jiabao said the government needed more time to assess the risks to Hong Kong's financial system. The delay also highlighted conflicting goals among financial regulators on the mainland as the government tried to ease pressure on the yuan to rise while seeking to avoid a fund exodus that could trigger a market slump.
"Conditions have changed a lot. After the financial crisis broke out, rising markets were worried about outflow of capital rather than inflow," said Li Huiyong, an analyst at Shenyin and Wanguo Securities Co. "The regulator hasn't worked out a measure to control the flow of forex capital."
Some analysts forecast the government will launch similar tools in the future to allow mainland individuals to invest overseas.
The government has already expanded the Qualified Domestic Institutional Investor program, under which mainland institutions can invest in overseas markets. Last year, the regulator granted US$65 billion of quotas under the QDII scheme, media reports said.
The government also plans to launch exchange-traded funds that let investors buy or sell shares in an entire benchmark portfolio.
The "through-train" plan expired, the State Administration of Foreign Exchange has said.
The central government in August 2007 announced a pilot program under which mainland residents with a Bank of China account in Tianjin would be allowed to buy Hong Kong stocks. It was aimed at channeling the country's rising foreign exchange reserves and boosting the Hong Kong stock market.
The announcement of the program spurred the Hang Seng Index to surge 55 percent in three months.
However, the pilot program's launch had been delayed after Chinese Premier Wen Jiabao said the government needed more time to assess the risks to Hong Kong's financial system. The delay also highlighted conflicting goals among financial regulators on the mainland as the government tried to ease pressure on the yuan to rise while seeking to avoid a fund exodus that could trigger a market slump.
"Conditions have changed a lot. After the financial crisis broke out, rising markets were worried about outflow of capital rather than inflow," said Li Huiyong, an analyst at Shenyin and Wanguo Securities Co. "The regulator hasn't worked out a measure to control the flow of forex capital."
Some analysts forecast the government will launch similar tools in the future to allow mainland individuals to invest overseas.
The government has already expanded the Qualified Domestic Institutional Investor program, under which mainland institutions can invest in overseas markets. Last year, the regulator granted US$65 billion of quotas under the QDII scheme, media reports said.
The government also plans to launch exchange-traded funds that let investors buy or sell shares in an entire benchmark portfolio.
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