Chinese regulators have announced plans to connect the stock exchanges of Hong Kong and Shanghai by allowing 23.5 bn yuan ($3.8 bn) in cross-border daily trading between the two.
Investors in Shanghai will be able to trade Hong Kong-listed stocks to a maximum volume of 10.5 bn yuan a day while Hong Kong-based investors will be able to trade as much as 13 bn yuan daily in Shanghai stocks, the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission announced today.
‘Allowing mutual investment in Shanghai and Hong Kong stocks is an important opening of China’s capital markets,’ reads the statement on the CSRC web site. ‘It will facilitate the connection of the capital markets of the two areas, promoting the bilateral opening of the capital markets, among other multiple positive factors.’
Under the plan, Hong Kong authorities will require investors from the Chinese mainland to have a minimum of 500,000 yuan in their bank accounts. It also limits the overall investment from Hong Kong in mainland stocks to a maximum of 300 bn yuan during an initial phase. The statement refers to the plan as a ‘pilot program’ that could be amplified after about six months.
Hours before the announcement, Chinese Premier Li Keqiang referred to the plan in a speech at the Boao Forum for Asia in the Chinese province of Hainan.
‘We will actively create conditions to establish a transaction interconnection mechanism for the Shanghai and Hong Kong stock exchanges, to push forward the two-way opening of capital markets in mainland China and Hong Kong,’ Li said, as reported by Reuters.
The news agency also cited Hong Kong finance minister John Tsang as saying that Hong Kong is preparing a new round of opening up to overseas and mainland investors.
