White Collar | Hong Kong brokers left out by new 'through train' plan
Industry players plan to lobby for changes so that they can also serve mainland investors
The latest version of the "through train" scheme - Beijing's plan to let mainlanders trade directly in Hong Kong stocks - is pulling into the station.
But unlike the last proposal in 2007, which would have benefited local brokers, this year's version seems to benefit mainland brokers more.
Let's look at the details. A mainland media report said on Thursday that Hong Kong Exchanges and Clearing and the Shanghai Stock Exchange had agreed to link their systems to allow investors on both bourses to trade in each other's market.
After 18 months of negotiations, many believe there will be progress, but Beijing is still a long way from saying yes
That led the market to believe the "through train" would soon be ready to leave the station. After HKEx saw its shares rise 5 per cent, it asked for suspension of trading in its stock 48 minutes before the market close. The exchange said that evening that no deal had been made although discussions were under way.
Based on the wisdom of "buy on rumour, sell on news", it makes sense for investors to act quickly. When Beijing announced the proposed "through train" scheme in August 2007, the stock market shot up and turnover tripled to more than HK$200 billion a day.
HKEx will definitely be a big winner if the scheme is implemented.
That is why chief executive Charles Li Xiaojia put the scheme in his three-year strategy plan in January 2012. After 18 months of negotiations, many believe there will be progress, but Beijing is still a long way from saying yes.
Looking back, while the 2007 version of the "through train" was announced officially, it still failed to get up a head of steam.