Regulators have announced that the Hong Kong and Shanghai stock exchanges will be connected and will begin trading on the 17th November. The stock trading link will allow foreigner investors wider access to mainland China’s tightly restricted equity market.
The so-called Stock Connect will strengthen the two cities’ roles as global financial centres and open the door for foreigners to a $4.2 trillion pool of capital. The trading move, which has elevated China’s capital markets to the global stage, comes as China is quietly expanding its financial ties with neighbors like South Korea and Australia through new trade deals.
Officials in Hong Kong banged a gong on Monday morning to mark the start of trading under the Shanghai-Hong Kong Stock Connect platform, which will let investors buy and sell shares through each other’s exchanges.
C K Chow, the chairman of Hong Kong’s stock exchange operator, told guests at an opening ceremony: “Today we are going to witness history.”
The development is a boon to investors, banks and brokerage firms that have positioned themselves in recent months to benefit from the rush of requests to trade stocks on both sides of the border. In recent weeks, brokerage firms such as Credit Suisse and Macquarie Securities have announced initiatives to provide new research to investors.
The Hong Kong Monetary Authority, the territory’s de-facto central bank, issued a statement saying it was “pleased” with the approval after “intensive discussions and preparations.
The linking of the Hong Kong and Shanghai stock markets will also propel the development of offshore renminbi (yuan) business in Hong Kong to new heights.”
The liberal economic manoeuvre means global investors can access Chinese stocks from Hong Kong; a move that could potentially generate £2.3Bn worth of trades per day.