Shenzhen sets up London Connect link, adding a second transborder funding channel between China and the UK for companies to raise capital
- The Shenzhen-London Connect will enhance ‘capital market connectivity’ between China and the UK on depository receipts, indices and cross-border financing services
- GDRs, under the cross-border stock connect initiative, have gained traction in recent months, as 41 Chinese firms are in the process of listing their GDRs overseas
China and the United Kingdom will extend their three-year-old transborder investment channel with a bridge between southern China’s technology hub Shenzhen and London.
“The room for cooperation in the capital markets of China and the United Kingdom is relatively big, with [promising] potential”, said the Shenzhen exchange, home to 2,753 listed companies. The exchange said it would “constantly deepen mutual connectivity with overseas capital markets”.
The expansion is the second leg of a cross-border link between the two countries, three years after the establishment of the Shanghai-London Connect with the larger Shanghai Stock Exchange. The links enable Chinese companies to list their A-shares as global depository receipts (GDRs) in London and raise capital from European investors, in much the same way American depository receipts (ADRs) allow US-listed Chinese companies like Alibaba Group Holding and Bank of China to raise funds from US investors.