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Integration of Hong Kong and Shenzhen exchanges doable

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Every once in a while there are calls for the integration of the Hong Kong and Shenzhen stock exchanges. The latest one came from Professor Lawrence Lau Juen-yee, the vice-chancellor of the Chinese University, who is also vice-chairman of the China Society of Finance and Banking.

As usual, the naysayers, who are understood to include some of the senior management at the Hong Kong bourse, call it 'mission difficult' if not impossible.

The reason they have been giving for the past 10 years is that the two bourses are different animals - Hong Kong Exchanges and Clearing is a listed entity while its Shenzhen peer is no more than a government department with a corporate title.

'This cannot be done,' said a senior HKEx official in a closed-door conference. This response shows not only a lack of creativity but also a failure to grasp what is happening in Hong Kong, the Pearl River Delta and the country as a whole.

Anyone doing serious business on the mainland can tell you that no structural hurdle is insurmountable as long as there is political will or lobbying. Haven't we seen the listings of the old Ministry of Petroleum and the Ministry of Telecommunications which would have been considered 'crazy ideas' 10 years ago?

If an integration of a commercial entity and a government department is technically impossible, how about the formation of a Growth Enterprise Market joint venture between Shenzhen and Hong Kong. This way both bourses would share the benefits. The yet-to-be-launched mainland market will get the much-needed international recognition and the Hong Kong one will indirectly benefit from mainland liquidity.

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