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10-04-2014, 04:01 PM
Signs of bad times - else why free up a closed market after such a long time...
http://www.bloomberg.com/news/2014-04-10...-says.html
China Unveils Plan to Link Shanghai and Hong Kong Bourses
By Kana Nishizawa Apr 10, 2014 3:28 PM GMT+0800 3 Comments Email Print
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Photographer: Lam Yik Fei/Bloomberg
Traders work on the trading floor of the Hong Kong Stock Exchange in Hong Kong.
China plans to connect the stock exchanges of Hong Kong and Shanghai, allowing a combined 23.5 billion yuan ($3.8 billion) of daily cross-border trading.
Investors will be able to trade 10.5 billion yuan of Hong Kong-listed stocks through the Shanghai exchange, and 13 billion yuan of mainland shares through Hong Kong, the China Securities Regulatory Commission said in a statement on its website today. That’s equivalent to about 21 percent of the average daily value of shares bought and sold in Hong Kong over the past year, and 14 percent of daily trading on the Shanghai Composite Index, according to data compiled by Bloomberg.
“The quota will have a significant impact on the Hong Kong market because it accounts for about a quarter or fifth of the daily turnover,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. “The quota amount is a starting point,” and may be increased, he said.
The announcement is a boost to efforts by Hong Kong bourse head Charles Li to better position the city as the investment gateway to the world’s second-biggest economy. A 2007 plan to allow Chinese people to invest directly in Hong Kong stocks, which was later scrapped, helped push the Hang Seng Index to a record that year. The Shanghai Composite is trading 65 percent below its 2007 peak, while valuations on Chinese shares traded in Hong Kong dropped last month to the lowest since 2001.
Opening Markets
The aggregate quotas for the cross-border trading are 250 billion yuan for Hong Kong-listed stocks, and 300 billion yuan for Shanghai shares, Hong Kong’s Securities and Futures Commission said. The limits may be adjusted in the future, and preparations for the link will take about six months, according to a statement from the regulator.
Connecting the exchanges will “further improve the opening and healthy development of capital markets in China and Hong Kong,” Premier Li Keqiang said in Mandarin today at the Boao Forum on China’s Hainan Island. Stocks with a primary listing in Shanghai have a market value of $1.94 trillion, compared with $3.56 trillion for Hong Kong, data compiled by Bloomberg show.
The Hang Seng Index rose 1.1 percent as of 3:09 p.m. in Hong Kong, extending gains after the announcement. The Hang Seng China Enterprises Index reversed declines to gain 0.4 percent, with mainland brokerages among the biggest gains on the measure.
Guotai Junan International Holdings Ltd. (1788) rose as much as 26 percent, a record gain, and is up 11 percent to HK$4.85 at 3:24 p.m. Citic Securities Co. and Haitong Securities Co. each surged at least 13 percent in Hong Kong. Hong Kong Exchanges & Clearing Ltd. (388), the world’s third-biggest bourse operator by market value, is suspended from trade.
Aggregate Quota
Individual mainland investors need at least 500,000 yuan in their securities account to take part in the trading link, according to the SFC.
“This is good news for Hong Kong stocks,” Shirley Gu, an analyst at Guotai Junan Securities Co., said by phone in Shenzhen. “It’s not about the quota now -- the key is that the expectation is realized and this is now a certainty. This could attract new foreign investors and more active trading in Hong Kong.”
Mutual access would boost trading volumes and improve profitability for Hong Kong’s exchange, according to Kenny Tang, general manager of AMTD Financial Planning Ltd.
It would also help the Shanghai market in the long run as foreign investors buy cheap shares, while mainland individuals would have the option to invest in Hong Kong stocks, Tang said.
The People’s Bank of China said in January last year that it has started preparations for the qualified domestic individual investor program, or QDII2, which will enable individuals to invest in overseas capital markets.
In August 2007, China unveiled a so-called “through-train” program, in which citizens could invest directly in Hong Kong stocks, helping to push the benchmark Hang Seng Index (HSI) to a record that October. China scrapped the plan in January 2010 and instead expanded a program under which Chinese institutions can invest in overseas markets.
To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net
To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tan Hwee Ann
http://www.bloomberg.com/news/2014-04-10...-says.html
China Unveils Plan to Link Shanghai and Hong Kong Bourses
By Kana Nishizawa Apr 10, 2014 3:28 PM GMT+0800 3 Comments Email Print
Save
Photographer: Lam Yik Fei/Bloomberg
Traders work on the trading floor of the Hong Kong Stock Exchange in Hong Kong.
China plans to connect the stock exchanges of Hong Kong and Shanghai, allowing a combined 23.5 billion yuan ($3.8 billion) of daily cross-border trading.
Investors will be able to trade 10.5 billion yuan of Hong Kong-listed stocks through the Shanghai exchange, and 13 billion yuan of mainland shares through Hong Kong, the China Securities Regulatory Commission said in a statement on its website today. That’s equivalent to about 21 percent of the average daily value of shares bought and sold in Hong Kong over the past year, and 14 percent of daily trading on the Shanghai Composite Index, according to data compiled by Bloomberg.
“The quota will have a significant impact on the Hong Kong market because it accounts for about a quarter or fifth of the daily turnover,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. “The quota amount is a starting point,” and may be increased, he said.
The announcement is a boost to efforts by Hong Kong bourse head Charles Li to better position the city as the investment gateway to the world’s second-biggest economy. A 2007 plan to allow Chinese people to invest directly in Hong Kong stocks, which was later scrapped, helped push the Hang Seng Index to a record that year. The Shanghai Composite is trading 65 percent below its 2007 peak, while valuations on Chinese shares traded in Hong Kong dropped last month to the lowest since 2001.
Opening Markets
The aggregate quotas for the cross-border trading are 250 billion yuan for Hong Kong-listed stocks, and 300 billion yuan for Shanghai shares, Hong Kong’s Securities and Futures Commission said. The limits may be adjusted in the future, and preparations for the link will take about six months, according to a statement from the regulator.
Connecting the exchanges will “further improve the opening and healthy development of capital markets in China and Hong Kong,” Premier Li Keqiang said in Mandarin today at the Boao Forum on China’s Hainan Island. Stocks with a primary listing in Shanghai have a market value of $1.94 trillion, compared with $3.56 trillion for Hong Kong, data compiled by Bloomberg show.
The Hang Seng Index rose 1.1 percent as of 3:09 p.m. in Hong Kong, extending gains after the announcement. The Hang Seng China Enterprises Index reversed declines to gain 0.4 percent, with mainland brokerages among the biggest gains on the measure.
Guotai Junan International Holdings Ltd. (1788) rose as much as 26 percent, a record gain, and is up 11 percent to HK$4.85 at 3:24 p.m. Citic Securities Co. and Haitong Securities Co. each surged at least 13 percent in Hong Kong. Hong Kong Exchanges & Clearing Ltd. (388), the world’s third-biggest bourse operator by market value, is suspended from trade.
Aggregate Quota
Individual mainland investors need at least 500,000 yuan in their securities account to take part in the trading link, according to the SFC.
“This is good news for Hong Kong stocks,” Shirley Gu, an analyst at Guotai Junan Securities Co., said by phone in Shenzhen. “It’s not about the quota now -- the key is that the expectation is realized and this is now a certainty. This could attract new foreign investors and more active trading in Hong Kong.”
Mutual access would boost trading volumes and improve profitability for Hong Kong’s exchange, according to Kenny Tang, general manager of AMTD Financial Planning Ltd.
It would also help the Shanghai market in the long run as foreign investors buy cheap shares, while mainland individuals would have the option to invest in Hong Kong stocks, Tang said.
The People’s Bank of China said in January last year that it has started preparations for the qualified domestic individual investor program, or QDII2, which will enable individuals to invest in overseas capital markets.
In August 2007, China unveiled a so-called “through-train” program, in which citizens could invest directly in Hong Kong stocks, helping to push the benchmark Hang Seng Index (HSI) to a record that October. China scrapped the plan in January 2010 and instead expanded a program under which Chinese institutions can invest in overseas markets.
To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net
To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tan Hwee Ann