Delays aside from last month, the new link between Hong Kong and Shanghai markets is set to commence on 17 November.
At the end of October, the new link called Stock Connect was put on hold with no indication of future timetable, sending the Hang Seng down.
Today, the programme is back on track and Asian bourses are feeling the effect. From Friday’s closing price 23,475 to today’s opening of 24,094 the Hang Seng rose to first hour prices of 24,192, almost 3 percent. However, confidence was short lived as the index fell an hour into trading to 23,667.
The Hong Kong-Shanghai Stock Connect programme was first announced by Chinese premier Li Keqiang in April with banks rushing to align systems and organize clients. It was supposed to start at the end of October but relevant approval had not been forthcoming. Cooperation was said to be lacking from China due to the Hong Kong protests. Work over the last weeks from both exchanges alongside the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission, has now brought a confirmed date.
The purpose of the operation is to open up the mainly closed $4 trillion Chinese market to foreign investors, and give Chinese investors the opportunity to access the Hong Kong markets directly. At present all institutional investors have to gain individual approval through the Qualified Foreign Institutional Investor scheme, through Stock Connect markets will open, though access to the Chinese currency markets will not relax. Tough regulation and oversight on the market venture have been the main concerns with particular reference to the two different legal and tax regimes.
The prospect of Stock Connect will open the gates to index trades with an expectation for more exchanges to join the scheme in the future.
Hang Seng trading on the news of Stock Connect
CFDs on Indices are traded on STOCK.com with training given to clients.
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