A landmark trading link between Hong Kong and Shanghai’s stock exchanges officially launched on Monday. The move is expected to see billions of dollars in daily cross-border transactions and partially open up China’s closeted equities markets. The Shanghai-Hong Kong Stock Connect scheme is expected to allow the equivalent of $3.8 billion a day in cross-border transactions. It will enable international investors to trade selected stocks on Shanghai’s tightly restricted exchange and let mainland investors buy shares in Hong Kong.
China’s capital markets now face historic opportunities.
Xiao Gang, head of the China Securities Regulatory Commission
The creation of the trading platform is seen as a key step towards greater financial liberalisation in China. But it is subject to strict limits in order to preserve capital controls in China, where Communist authorities keep a tight grip on the yuan currency. At the opening ceremony, chief executive of Hong Kong’s stock exchange Charles Li, declared it a “historic” moment and hailed a “new era” of trade. Xiao Gang, head of the China Securities Regulatory Commission, added that the new platform was “conducive to the internationalisation of the renminbi”.