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March 6, 2015

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Shenzhen-HK stock link set in 2015

A trading link between Shenzhen and Hong Kong stock markets is to be launched within this year as approval is likely to be given in the first half of the year, China’s top securities regulator said yesterday.

“The preparation for the Shenzhen-Hong Kong Stock Connect is under way with extensive participation of securities regulators, exchange operators and clearing institutions from both sides,” Xiao Gang, chairman of the China Securities Regulatory Commission, said on the sidelines of the annual session of China’s top legislature.

His remarks echoed Premier Li Keqiang who said in the government work report yesterday that China will launch the Shenzhen-Hong Kong Stock Connect on a trial basis “at an appropriate time.”

The new link will allow overseas investors to tap some of China’s most high-growth sectors such as information technology and health care.

“With geographic adjacency, the Shenzhen link will be more effective than the Shanghai link in promoting the integration of financial, accounting and legal sectors as well as related frameworks of the two cities,” Liang Haiming, a Hong Kong-based financial commentator, wrote in his blog.

However, the Shenzhen Stock Exchange’s reaction was quite muted as the Shenzhen Component Index dipped 0.76 percent yesterday while the ChiNext board, China’s Nasdaq-style market for growth enterprises, edged up 0.25 percent.

There are concerns the new link will suffer from the same fate as the Shanghai-Hong Kong Stock Connect that saw investors not tapping most of the available trading quota.

The Hong Kong exchange on Monday allowed short selling in which offshore investors could make bearish bets against designated Shanghai-listed shares. But no short selling has yet been made by yesterday, data from the Hong Kong bourse showed.




 

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