NewBeijing urged to relax and expand stock connect scheme
Brokers call for small companies to be allowed on to one-year-old cross-border trading plan to draw in more of China’s retail investors
Brokers are calling for Beijing to allow more mainland retail investors to trade through the one-year-old stock connect scheme between Hong Kong and Shanghai, while they also want to see more small companies made available through the scheme.
They also want to see the cross-border trading scheme grow by adding the Shenzhen market to the mix as soon as possible, with a bond connection to come later.
“While the stock connect scheme could be seen as successful in its first year, there is room for improvement. The restriction that only mainland retail investors with 500,000 yuan would be allowed to trade Hong Kong stocks via the scheme should be abolished,” said Christopher Cheung Wah-fung, the legislator representing the financial services sector.
“This restriction excludes the majority of mainland retail investors which explains why trade from them to Hong Kong is lower than international investors trading Shanghai stocks under the scheme,” Cheung said.
The scheme has no criteria on international investors so they can easily trade in Shanghai.
The Shanghai-Hong Kong Stock Connect, also known as the stock through train scheme, will mark its first anniversary on November 17. In that time, about two trillion yuan worth of stocks have been traded across the scheme.