Stock Connect to Open Earlier as Expected
The trade link between Hong Kong and Shenzhen stock exchanges will definitely be launched on the second half of this year after the Shanghai Hong Kong Stock Connect which opened in November. The new connection with Shenzhen will offer investors more choices. Shenzhen mayor Xu Qin stated that the stock exchanges of Hong Kong and Shenzhen have already made preparations to give full support to the program and is awaiting approval from the Central Government.
In the past ten years, Shenzhen was able to deepen its cooperation ties with Hong Kong in multiple fields ranging from environmental protection, economy, education, culture, sanitation and health. Technical working links can be completed soon as Shenzhen is fast preparing for the program.
The mutual market access program is also expanded to allow cross border trading of equity derivatives, fixed income assets and commodities. The Shenzhen Hong Kong link boosts the possibility for issuing A shares that is included in the MSCI Inc.’s popularly traded emerging market index. But trading under the current link is tepid as investors only used 20 percent of the 235 billion yuan quota that was available daily.
Securities regulators in both sides plans to ease curbs on the links and hopefully increase the number of trading days to further boost vitality. Furthermore Hong Kong must enhance its competitiveness and reposition its financial markets.