China to link Shenzhen, Hong Kong stock exchanges

China will link trading between its Shenzhen and Hong Kong stock markets as part of a push for financial reforms, Premier Li Keqiang said Thursday, following a similar scheme with Shanghai’s flagship bourse. The “Shenzhen-Hong Kong Stock Connect” trial will be launched “at an appropriate time”, Li told the opening of the annual session of the National People’s Congress, China’s Communist-controlled legislature. In November, China’s main stock exchange in commercial hub Shanghai and the market in Hong Kong, a special administrative region of China, began allowing investors on each exchange to trade selected stocks on the other through their existing accounts. The exchange has dedicated boards for technology firms and smaller companies, and trading volumes sometimes exceed those of Shanghai.

This will accelerate the internationalisation of the A-share market, which will have significant long-term effects on liquidity and investment style. So it not only concerns the capital markets but also China’s financial reforms.

BOC International analyst Shen Jun

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