China reveals plans to link the Shanghai and Hong Kong stock exchanges

‘Through train’ link-up will allow a combined €2.73 billion of daily cross-border trading

China’s securities regulator and its Hong Kong counterpart said on Thursday they would allow mainland investors to trade shares in designated companies listed in Hong Kong, while letting Hong Kong investors buy selected Shanghai-listed shares. Photograph: Bobby Yip/Reuters

China’s securities regulator and its Hong Kong counterpart said on Thursday they would allow mainland investors to trade shares in designated companies listed in Hong Kong, while letting Hong Kong investors buy selected Shanghai-listed shares. Photograph: Bobby Yip/Reuters

 

New rules allowing direct share trading between the bourses of the two financial hubs of Hong Kong and Shanghai could be in place within six months.

The so-called “through train” scheme was first floated in 2007 but a formal announcement came after Li Keqiang told the Boao investor forum in Hainan that the two exchanges would join forces.

The move will give a significant lift to Hong Kong’s efforts to position itself as the investment gateway to the world’s second-biggest economy.

Connecting the two bourses will “further improve the opening and healthy development of capital markets in China and Hong Kong”, Mr Li told the forum. “We are going to have more integration with the international capital markets.”

The scheme allows investors to trade 10.5 billion yuan (€1.22 billion) of Hong Kong-listed stocks through the Shanghai exchange, and 13 billion yuan (€1.51 billion) of mainland shares through Hong Kong, the China Securities Regulatory Commission said in a statement on its website. They will place the orders with the Shanghai Stock Exchange, which will then pass them on to Hong Kong Exchanges and Clearing (HKEx).

That works out at around 21 per cent of the average daily value of shares bought and sold in Hong Kong over the past year, and 14 per cent of daily trading on the Shanghai Composite Index, according to Bloomberg data. A total of 266 Hong Kong-listed stocks and 560 mainland A-shares are included in the scheme, as well as the constituent stocks of major indices.

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