Yuan status rules out A and H-share platform, Paul Chow tells mainland
Hong Kong Exchanges and Clearing chief executive Paul Chow Man-yiu has dismissed the proposal by a leading mainland official to create an A- and H-share arbitrage platform, saying that widespread cross-border stock trading is not feasible as long as the yuan is not fully convertible.
Although the qualified domestic institutional investors and qualified foreign institutional investors schemes are now the 'only bridges between Hong Kong and the mainland to exchange capital, the size of the capital is still very small to the whole market values' for both Hong Kong and China markets, Mr Chow said yesterday.
'Unless the yuan is made fully convertible, stocks in the two places cannot be freely circulated.'
His remarks were in response to an idea proposed last week by Fang Xinghai, deputy director of the Shanghai government's financial services office, that a platform could be set up to allow investors on both sides of the border to trade shares in the 38 companies listed dually in Shanghai and Hong Kong.
Despite the mainland's capital controls, Mr Fang said expanding the existing - though limited - QDII and QFII mechanisms could be the foundation for such a system.
