Mainland China allows residents from Hong Kong and Taiwan to trade A shares

People from Hong Kong, Macau and Taiwan on mainland can open accounts

PUBLISHED : Sunday, 10 March, 2013, 12:00am
UPDATED : Sunday, 10 March, 2013, 8:55am

The mainland said it will allow Hong Kong, Taiwan and Macau residents living there to open domestic trading accounts, the latest move to boost Asia's third-largest equity market.

The rule, which takes effect on April 1, will allow them to open accounts for yuan-denominated stocks, or A shares, according to a statement on the website of China Securities Depository and Clearing Corp.

The change, approved by the securities regulator, is aimed at "facilitating their access to investment in the A-share market," according to yesterday's statement.

It confirmed a South China Morning Post report last month that Beijing had initially approved including mainland residents from Hong Kong, Macau and Taiwan as qualified A-share investors, in a bid to inject vigour into a lacklustre stock market.

China has increased quotas for foreign institutions, encouraged dividend payments, tightened rules on delisting companies and cut trading costs as part of efforts to boost a stock market that has underperformed its Hong Kong counterpart. The Shanghai Composite Index, the country's benchmark, fell 1.7 per cent this week, paring its advance this year to 2.2 per cent.

AMTD Financial Planning general manager Kenny Tang Sing-hing said A shares are attractive to investors as the prices are still at low levels. "The investment outlook for A shares is optimistic as they have benefited from the central government's policies," he said.

But he did not expect the new policy would lead to a strong rebound in the A-shares market.

Andy Lee Yiu-chi, chief executive for southern China at property agency Centaline China, has been based on the mainland for many years. "I'm not interested in investing in the A-shares market as many A shares will not declare dividends to shareholders," he said. "I'm looking for a long-term investment. Investment yield is important to me."

Previously foreign individual investors were only allowed to trade B shares - stocks that trade in US dollars in Shanghai or Hong Kong dollar-denominated equities listed in Shenzhen.

There are about 450,000 residents from Hong Kong, Macau and Taiwan in the mainland, Xinhua reported yesterday, citing data from the national census conducted in 2010.