Chinese may have to wait a bit longer to invest in Hong Kong's sizzling stock market, after China's premier set several conditions before the much-anticipated scheme could go ahead, a report said yesterday.
Investors have been pouring money into Hong Kong's stock market in anticipation of the scheme, announced on Aug. 20, sending the benchmark index up 40 percent.
But Chinese Premier Wen Jiabao (溫家寶) said four conditions would need to be met before it could be implemented, including assessing the impact on Hong Kong and mainland share markets, and ensuring that Chinese are aware of the risks of investing, the South China Morning Post said.
JP Morgan head of China equities Jing Ulrich told the Post it would probably take a few more months before China gave the green light for the scheme.
Wen said China needed a law to regulate outward funds to minimize the impact on the Shanghai and Shenzhen stock markets, and to look at the negative impact such a move could have on Hong Kong's index, the report said.
In his first comments on the plan, Wen also said Chinese investors needed to better understand the risks associated with playing the stock market.
We "should make scientific judgment and analysis on what impact the massive funds flooding into Hong Kong financial market would have," he told Hong Kong journalists in Uzbekistan, according to the Post.
Hong Kong Secretary for Financial Services and Treasury Chan Ka-keung (
"We understand it involves huge numbers of investors and we have to make sure the system can protect the rights of the investors with proper risk management," he said, according to the report.
He also said the three markets, Hong Kong, Shanghai and Shenzhen would eventually integrate, but gradually.
The "through-train," as the investment scheme has been dubbed, was raised as a potential outlet for the huge amounts of cash circulating in China.