HK, Shanghai to begin cross-market trade


By Dennis Chong, AFP

HONG KONG — China Thursday unveiled a plan allowing cross-trading between Hong Kong and Shanghai’s stock markets, in the mainland’s latest move to open up its capital markets and promote the yuan as an international currency. The China Securities Regulatory Commission said in a joint statement with the Securities and Futures Commission of Hong Kong the trial would begin in six months and enable dealers to invest in designated shares. “Shanghai Stock Exchange and the Stock Exchange of Hong Kong will enable investors to trade eligible shares listed on the other’s market through local securities firms or brokers,” the joint statement said.

“It is an important step in the opening up of the China capital market and will enhance capital market connectivity between mainland China and Hong Kong.”

Chinese Premier Li Keqiang said at the Boao Forum for Asia that the plan “will enable us to expand market access, foster a better business environment to unleash greater dividends of reform, spark social creativity and stabilize market expectations.”

Plans for a similar tie-up in 2007 sparked a surge in share prices in both cities but they were eventually scrapped as the global financial crisis unfolded. Under the scheme announced Thursday mainland investors will be able to trade up to 13 billion yuan (US$2.11 billion) daily in Hong Kong stocks, while Hong Kong dealers can buy and sell up to 10.5 billion yuan a day, according to the statement. The initial cap for the transactions has been set at 550 billion yuan and is subject to review.

Hong Kong Exchange chairman Chow Chung-kong said 266 Hong Kong-listed shares would take part in the scheme, along with just over 560 stocks listed in Shanghai. Hong Kong Chief Executive Leung Chun-ying said the scheme, intended to increase capital flow between the two markets, would be implemented with policies to control risks. “The Hong Kong government will take an oversight role. It is important that, while we open up the two markets to the respective investors in these two markets, we pay due attention to the matter of investor protection,” he told reporters.