The first stock connect program linking Shanghai to the offshore market in Hong Kong gives foreign investors access to only a fraction of the almost 3,000 stocks listed on mainland markets. There will be no overall limit through the Shenzhen link, although there will be daily limits of CNY10.5bn into Hong Kong stocks.
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Niu Huayong, dean of the Business School at Beijing Foreign Studies University, said the stock connect was positive as it was an institutional and long-term move to promote the development of Chinese capital market.
At the midday break, Hong Kong’s Hang Seng Index rose just 0.2%, with the Shanghai Composite declining by 0.2%. The Shenzhen Component Index rose by 0.07 percent, while the ChiNext startup index edged higher by 0.32 percent.
“Foreign investors are still taking a wait-and-see approach to [mainland Chinese-listed] A-share investment as they are yet to regain confidence in the mainland stock market”, said Liao Qun, China chief economist at Citic Bank International in Hong Kong.
The numbers will be more precise once Shenzhen and Hong Kong stock exchanges clarify how they will calculate corporate market valuations.
There are more than 1,800 companies listed in Shenzhen, with a combined market capitalization of $3.2 trillion, compared with $3.4 trillion in Shanghai.
Mainland investors appeared unenthused, preferring to use other ways to invest overseas. Today’s joint announcement issued by the SFC and the CSRC also abolished the aggregate quota under Shanghai-Hong Kong Stock Connect with immediate effect. Shares in China were mixed after leaders approved a plan to give foreign investors more access to Chinese equities through Hong Kong.
The launch of the program will help investors “better share the fruits of economic development in both the mainland and Hong Kong, deepen the financial cooperation between them, and consolidate and enhance Hong Kong’s position as an worldwide financial centre”, Keqiang said. China hasn’t announced a date, but the trading link is expected in 2016.
Mainland China’s second stock exchange, in the southern city of Shenzhen, was due to follow previous year, but the launch was delayed by a market rout.
Anbang’s share increase, which followed the high-profile bidding war around Vanke, adds to more evidence that some listed property companies are undervalued and thus have become acquisition targets.
“Crises happen all the time”, he said. It wants to prove to global investors that it is making progress towards removing barriers for them to tap China’s US$ 6.5 trillion equity market. “Anything could happen in the future”. The Hong Kong-traded shares of GF Securities Co. fell 4.4% and Citic Securities Co. was down 3.9%. Shanghai and Hong Kong stock exchanges can adjust the quotas based on operating conditions.
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“The expansion of mutual stock market access represents yet another milestone toward strengthening the interconnectivity between the stock markets in Hong Kong and the mainland as well as consolidating Hong Kong’s position as a major offshore Renminbi center”, said Carlson Tong, the SFC’s chairman.
