Beijing will link up the Hong Kong and Shenzhen bourses at an “appropriate time”, Premier Li Keqiang announced in his annual work report yesterday, just hours before the local bourse reported a 13 per cent profit growth due to its tie up with the Shanghai bourse in November. “The Shenzhen-Hong Kong stock connect programme will be launched at an appropriate time,” Li told the annual session of the National People’s Congress in Beijing. “The Shanghai and Hong Kong stock connect has been launched successfully. More financial reforms will come.” Li said the stocks through-train schemes between Hong Kong and Shanghai and then Shenzhen would be a trial for financial reform on the mainland. It still has capital controls but international investors can now trade Shanghai-listed A shares via HKEx and that arrangement is expected to be expanded to Shenzhen this year. The premier told the Congress his other financial reforms which would include the launch of free-trade zones in Guangdong, Tianjin and Fujian and plans for free-trade agreements with Iceland, Switzerland, South Korea and Australia. Li also wants to promote the private sector to set up small and medium banks. The premier said he plans to introduce a deposit insurance scheme which would bolster the public’s confidence in using smaller banks. As for the yuan, the country will keep the currency at an “appropriate level” by adding a more flexible trading band, Li said. HKEx is already benefiting from higher turnover from the tie up scheme. At noon on Thursday, it reported a net profit of HK$5.17 billion for last year, up 13 per cent year on year, thanks to increased turnover from the Shanghai stock through-train scheme in recent months and higher volume of commodities trading at its wholly owned unit, the London Metal Exchange. The exchange’s profit growth slightly exceeded market expectations of about 12 per cent. A final dividend of HK$2.15 per share will be paid, brining the full-year dividend payment to HK$3.98. “Although the year started relatively weakly, market sentiment in the second half of the year quickly picked up, due to the announcement of the Shanghai-Hong Kong Stock Connect and a renewed interest in Chinese companies,” HKEx chief executive Charles Li Xiaojia said in the results announcement released on Thursday afternoon. The daily average turnover for all of last year was HK$69.46 billion, up 11 per cent from 2013. The through-train scheme from November 17 boosted average daily turnover in the fourth quarter to HK$80.7 billion, compared with HK$70.9 billion in the third quarter. Total derivative turnover rose 10 per cent last year, with stock options turnover up 21 per cent. London Metal Exchange saw turnover grow 4 per cent last year to 700,204 lots. Li said LME would bring more benefits to HKEx this year as it had increased its fees from January, while its clearing house LME Clear was launched in September. Listing fee income rose by 5 per cent to HK$451 million because there were more new listings.The higher income from better turnover was offset by higher operating expenses, which rose 7 per cent to HK$2.96 billion due to higher staff costs.
