Brokers accept delay in stock through train scheme
Industry observers say pushing back the launch of the through train scheme will give regulators more time to clarify the tax and holiday issues
Brokers have accepted a slight delay of the through train scheme as they want the authorities to clarify the outstanding issues over tax and holidays before the launch of the plan to connect the stock markets of Hong Kong and Shanghai.
Beijing has not yet announced a launch date although a government source told the South China Morning Post that Financial Secretary John Tsang Chun-wah and other financial officials would be available to go to Shanghai on October 27 for a ceremony to mark the launch.
The absence of an announcement in the China Securities Regulatory Commission's (CSRC) weekly media briefing last Friday has led market participants to speculate that the scheme may have been pushed back to November or December.
"If the through train scheme will not start from [October 27] as the market has widely expected, it is not too bad as there are many outstanding issues that have not yet been cleared," said Christopher Cheung Wah-fung, a legislator for the financial services sector.
"The mainland has not yet announced if overseas investors who trade in the country's stock markets would need to pay capital gains tax. Beijing also has not yet announced if it would lift the cap for Hong Kong individuals to exchange up to 20,000 yuan [HK$25,250] a day. If the scheme takes off a bit later, it will allow more time to discuss these issues."
Beijing said in April that it wanted to connect the Hong Kong and Shanghai stock markets, allowing mainland investors to conduct cross-border trading at a total quota of 550 billion yuan.
A similar through train scheme was proposed in August 2007 but was suspended a few months later as the mainland feared the set-up had deficient controls.