Until the launch of the Shanghai-Hong Kong link, only a few foreign institutions were allowed to buy mainland-traded shares in a closely regulated system.
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Why Is Shenzhen Connect important in one word?
Besides, the Shanghai Stock Exchange is dominated by state-controlled industry giants such as Sinopec and financial institutions such as the big four banks.
WALL STREET SLIDE: U.S. stocks slid as investors sold phone company and utility shares. So, foreign investors betting on China moving away from heavy industries and toward greater domestic consumption may want access to the Shenzhen market. Those tools would allow foreign and Chinese investors access to a broader range of hedging tools to protect their investments in the cash markets.
MSCI has cited “accessibility” issues tied to the mainland A-shares market for shutting it out from its key EM indexes.
The MSCI Emerging Markets index has roughly $1.5 trillion of active and passive assets benchmarked to it. Most other sectors also rose, with an index tracking financials up 1.1 percent.
Elsewhere in the region, commodity-linked stocks propped up Japanese markets after crude-oil prices rose to a fresh one-month high on Tuesday, amid hopes of output caps from the Organization of the Petroleum Exporting Countries.
Those looking to profit from arbitrage trading may turn to stocks listed in both Hong Kong and Shenzhen.
The launch of Shenzhen-Hong Kong Connect doesn’t immediately fix any of these issues.
Will this new stock link program lift share prices? A similar initiative – Shanghai-HK Stock Connect – has already been up and running since November 2014.
The Shenzhen Composite Index and the ChiNext index, a listing board focused on fast-growing startups, were up 0.3% each.
Tam expects more opportunities brought by the liberalization of the yuan’s capital account in the future. The Hong Kong-traded shares of GF Securities Co. fell 3.7% and Citic Securities Co. This rule will be changed to broaden access to all other investors, according to the joint announcement.
Yes. The aggregate quota for both north and southbound trading has been abolished with immediate effect, putting it in-line with Shenzhen Connect.
Yes, but only on daily net purchases.
Securities regulators canceled the aggregate quota for the new program, but put the same caps on daily transaction volume as the Shanghai-HK mechanism, which amount to 13 billion yuan (1.96 billion USA dollars) for northbound investment and 10.5 billion yuan for trading Hong Kong-listed shares. But having seen Shanghai Connect operate smoothly over the past 21 months, the time is ready for the quota to be removed.
There will not be any limit on the accumulated amount of investments that can be made in either direction.
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.
Opening up the market to foreigners could entice players in.
Still, KGI Fraser Securities trading strategist Nicholas Teo is keeping an eye on the Shenzhen market.
Arbitrage investors can make money by exploiting the divergence in valuations.
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The link does not mean foreign investors, including those in Singapore, will necessarily pile into Shenzhen shares, Ms Yang said.
