Regulators won’t impose an aggregate quota on trading via the Shenzhen-Hong Kong exchange link, the China Securities Regulatory Commission said on Tuesday, while a cap will be removed for its Shanghai equivalent.
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Chinese Premier Li Keqiang said in a statement on Tuesday that the State Council has approved the Shenzhen-Hong Kong Stock Connect and “everything is basically ready” for the launch.
The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited, wholly-owned subsidiaries of HKEX, will soon distribute circulars to their respective Participants to provide information on today’s joint announcement by the CSRC and SFC along with the related market readiness programmes.
BEIJING (AP) – Global stocks were mixed Wednesday after Wall Street declined and China said it will give foreign investors more access to Chinese equities through Hong Kong. But the Shanghai-Hong Kong link has proven hugely popular with foreign investors, who bought the maximum number of shares allowed in its first few days.
Meanwhile, Hong Kong’s Hang Seng Index HSI, +0.20% was up 0.3%, and both the Shenzhen Composite Index 399106, +0.30% and the start-up focused ChiNext Index added 0.2%. An increase of 2.4% was gained by the Shanghai Composite mid-Monday while the China Shenzhen Chinese small-cap companies gained a 3% increase.
“The pickup [of the Shanghai-Hong Kong connect] has never been that strong because I think the regulatory environment in China is still a very risky one”.
The existing Shanghai-Hong Kong Stock Connect enables global investors to trade selected stocks on Shanghai’s tightly restricted exchange, and lets mainland investors buy shares in Hong Kong.
Experts say the Shenzhen-Hong Kong mechanism aims to promote opening up and reform of the mainland capital market.
Trade volume of the Shenzhen Stock Exchange reached 401 billion yuan on Tuesday, making the overall trade volume of the mainland’s stock market more than 800 billion yuan. It will benefit Hong Kong’s stocks, which are undervalued, compared with those in Shenzhen, said Dennis Huang, senior real estate and financial commentator in Hong Kong. The city, which borders Hong Kong, led China’s export boom that began in the 1980s.
Some investors believe the new link won’t see huge demand due to the high valuations of mainland stocks.
Traders rarely used up their daily quota via the existing link.
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The link’s approval means “the Chinese government is really delivering on its promise to open up its markets”, said Sandy Mehta, chief executive officer of Hong Kong-based advisory firm Value Investment Principals Ltd.
