Hong Kong Exchanges and Clearing (HKEx) must prepare to face direct competition with China's stock exchanges after the mainland joins the World Trade Organisation, HKEx chairman Charles Lee Yeh-kwong has warned.
The SAR's role as a capital-raising centre for Chinese enterprises would face erosion once the yuan became fully convertible, probably several years after WTO entry, Mr Lee said.
Warning that the 'rules of the game' might change completely following WTO entry, Mr Lee said HKEx's focus in the next few years would be on preparing for the challenge.
'Once the yuan is fully convertible, stock and cash could be transferred freely from one market to another and there will be no difference between A, B and H shares,' he said.
A shares are issued in domestic currency by Chinese enterprises listed on the Shanghai or Shenzhen stock exchanges and can be traded only by domestic investors.
B shares are issued in US dollars on mainland exchanges and reserved for foreign investors, while H shares are issued in Hong Kong dollars by mainland-incorporated enterprises listed in the SAR.
