Shenzhen-Hong Kong Stock Connect will boost city’s global status, says John Tsang

The much-anticipated share-trading link between Hong Kong’s and Shenzhen’s stock markets will “further strengthen Hong Kong’s status as an international financial centre”, the city’s financial chief said on Sunday morning.

Amid recent controversies sparked by Hong Kong independence advocates, John Tsang Chun-wah also said “deepening the city’s link” with mainland and global markets, and improving market infrastructure, were the only ways for the city to maintain “its unique role in China and around the world”.

On Tuesday, Premier Li Keqiang announced the State Council had already approved the new Shenzhen-Hong Kong Stock Connect. Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia said he expected the link to be up and running before Christmas.

It is the second cross-border stock trading arrangement between China and Hong Kong, after a similar link with Shanghai. London and Singapore are also trying to establish similar links with mainland exchanges.

Writing on his weekly blog, Tsang said: “Hong Kong can further strengthen its statuses as an international financial centre and an offshore trading hub. [China] can also make use of Hong Kong to further open up its capital market, and push forward the internationalisation of the Chinese yuan.

“It is definitely a correct way forward for the nation and for Hong Kong to deepen the integration between our financial markets.”

Speaking on TVB’s On the Record, Professor Priscilla Lau Pui-king, a Hong Kong deputy to the National People’s Congress, said the scheme would encourage more foreign institutional investors to be listed on the Hong Kong stock exchange.

“More than half of the stocks [listed in Hong Kong] are already backed by Chinese capital,” Lau said. “With the new scheme, [companies from around] the world can raise mainland funds through Hong Kong, while mainland firms can also raise foreign funds through us.”

Lau also said Hong Kong was experienced in handling financial crises. With the two cross-border stock trading arrangements in place, it could act as a buffer when the mainland market is volatile, she said.