China aims to link trading between the Shenzhen stock exchange and the Hong Kong market this year, People’s Bank of China (PBOC) Governor Zhou Xiaochuan (周小川) said, following a similar connection with the Shanghai bourse.
China launched a landmark “stock connect” between Shanghai and Hong Kong late last year, opening up its closeted share market to the outside world and giving foreign investors access to Chinese companies not quoted elsewhere.
Trading through the Shanghai-Hong Kong link was initially lackluster, although it later picked up during a huge rally in Chinese stocks before a bubble burst.
“The Shenzhen-Hong Kong connect will be launched this year, which shows China’s capital market opening a new route to link with the world,” Zhou said in an article posted on the bank’s Web site on Tuesday.
The southern boom town of Shenzhen borders Hong Kong, and as China’s second exchange, its bourse mainly trades small companies and technology stocks.
Investors cheered the news yesterday. The Shenzhen index surged 5.12 percent and the Shanghai index jumped 4.31 percent.
“This is giving a big psychological boost to the Chinese stock markets,” Partners Capital International (博大資本國際) chief executive officer Ronald Wan (溫天納) told Bloomberg News.
“But optimism may wane soon, given what has happened to the Hong Kong-Shanghai connect,” he said.
The PBOC later updated the posting, clarifying that the article was based on an internal speech that Zhou delivered in May.
The launch of the scheme was widely expected to be delayed after the plunges in Chinese stocks shook global markets. The benchmark Shanghai index is now down more than 30 percent from its June peak.
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