China has announced plans to connect the stock exchanges of Hong Kong and Shanghai, allowing a combined 23.5 billion yuan (US$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 China shares through Hong Kong, the China Securities Regulatory Commission said in a statement yesterday.
That is equivalent to about 21 percent of the average daily value of shares traded in Hong Kong over the past year, and 14 percent of daily trading on the Shanghai Composite Index, according to data compiled by Bloomberg.
Photo: 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,” Delta Asia Securities Ltd strategist Sam Chi Yung (岑智勇) said.
“The quota amount is a starting point,” and may be increased, he said.
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 (SFC) 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,” Chinese Premier Li Keqiang (李克強) said yesterday at the Boao Forum on China’s Hainan Island. Stocks with a primary listing in Shanghai have a market value of US$1.94 trillion, compared with US$3.56 trillion for Hong Kong, data compiled by Bloomberg showed.
Individual investors in mainland China 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,” Guotai Junan Securities Co (國泰君安證券) analyst Shirley Gu (古喬藝) said by telephone 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, AMTD Financial Planning Ltd (尚乘財富) general manager Kenny Tang (鄧聲興) said.
It would also help the Shanghai market in the long run as foreign investors buy cheap shares, while mainland Chinese individuals would have the option to invest in Hong Kong stocks, Tang said.
STEPPING UP: The firm has also asked employees to work in split shifts from this week and to halt all but essential overseas business travel from next month Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has implemented a remote work policy for employees not on production lines in an attempt to curb the spread of COVID-19, the world’s largest contract chipmaker said yesterday. This is the first time in the Hsinchu-based company’s history that it has launched a large-scale remote work policy, joining global technology companies, such as Apple Inc and Google, that encourage employees to work from home. The chipmaker has also asked employees to work in split shifts from this week, it said. As the number of virus infections continues to climb worldwide, TSMC has urged employees to halt unnecessary
A two-hour drive south of Amsterdam in Veldhoven, workers decked out head-to-toe in protective gear toil in vast assembly halls. Before entering the inner sanctuary of the facilities, they meticulously layer on masks, gloves and special socks. A single speck of dust or a hair can have devastating effects on production. The result of all this painstaking process is an environment that is 10,000 times more purified than outside. As COVID-19 grips the world, it might just be the safest place to work right now. The teams belong to ASML Holding NV, which holds a de facto monopoly on the industry of
DBS Bank Ltd yesterday hacked its GDP growth forecast for Taiwan this year to 0.9 percent, down from its estimate of 2.3 percent two months earlier, in light of the COVID-19 pandemic and increasing financial market volatility. The bank’s latest forecast was even lower than London-based IHS Markit Ltd’s estimate of 1 percent, while other research institutes’ projections range from 1.6 percent to 2.6 percent. Taiwan’s economic momentum is being negatively affected by the pandemic, DBS said. The rapid spread of the disease from Asia to Europe and the US has dampened the bank’s previous expectation of a “V-shaped” global rebound in the
DOWNSIDE RISKS: Firms have a ‘very low’ chance of boosting investment returns in the next two years, making it hard for them to improve their capitalization, an analyst said Taiwanese life insurers wanting to improve their capital structure face strong headwinds this year, given prolonged low interest rates and economic impacts derived from trade protectionism and the COVID-19 pandemic, Taiwan Ratings Corp (中華信評) said on Friday. The local life insurance sector also still has high asset risks and such risks are susceptible to market volatility, the local arm of Standard & Poor’s Global Ratings said. Since last year, major financial holding companies — including CTBC Financial Holding Co (中信金控), Cathay Financial Holding Co (國泰金控) and Shin Kong Financial Holding Co (新光金控) — have announced plans to raise fresh capital to
RSS