Protests raise fears of through train launch delay
Speculation is mounting over the launch of connect programme with authorities refusing to provide a date for cross-border trading scheme
As protests continue for a second week in the city, speculation is mounting over the so-called though train scheme that's set to allow cross-border stock trading with Shanghai by this month as the authorities are still refusing to provide a clear launch date.
With only three weeks left in the month and no fixed date for a launch, some insiders fear Beijing could push the date back in reaction to the protests.
"If there is prejudice from the regulatory body in China, they could deliberately delay the opening. But this is unknown right now," VC Brokerage director Louis Tse Ming-Kwong said yesterday.
China National Tourism Administration, the state-owned tour operator, reacted to the protests last week by barring group tour trips to Hong Kong.
Charles Li Xiaojia, chief executive of the Hong Kong stock exchange, looked to allay fears yesterday when he said in a statement that the protests would not have an effect on the opening of the through train. But when asked for a time-frame, he still could not give a confirmed opening date.
The scheme, which has been widely speculated to open on October 27, the last Monday of the month, will allow investors to conduct cross-border trading of stocks listed in Hong Kong and Shanghai under a total quota of 550 billion yuan (HK$694 billion).
International or Hong Kong investors will be able to trade up to 13 billion yuan of Shanghai-listed A shares a day while mainland investors will be able to trade up to 10.5 billion yuan of Hong Kong shares a day.
Student protests and the Occupy Central movement erupted in Hong Kong's financial district on September 28 and have shut down roads, schools, bank branches and other businesses across the city. Trading on the exchange, though, never stopped.
Protesters have demanded that Beijing lift restrictions on leadership elections in 2017 and also called for the resignation of Chief Executive Leung Chun-ying.
Though rules for the stock connect programme have not been laid down in detail, the market still expects a launch on October 27, said William Barkshire, managing director of Agora Partners in Shanghai and Hong Kong.
"I don't think Occupy Central will have any impact on the launch date," he said. "Indeed I think it will reinforce the mainland authorities' desire to deliver on time and demonstrate that it is business as normal in the short term."
After a rough three days of trading last week, the Hang Seng Index climbed 1.09 per cent yesterday to close at 23,235 points.
Last week the index fell 2.6 per cent when trading was limited to three days owing to two public holidays. It rose 0.6 per cent on Friday after falling up to 1.6 per cent in early trade that day.
"The market has been watching carefully … But the through train is not an IPO. It's a channel for trading," said Jeffrey Chan, chairman of the Hong Kong Securities Association.
The protests would not have an effect on the launch date for the cross-border trading scheme, Chan said.
Regulators, instead, would focus on whether or not the system and market participants are ready to begin trading before the launch, he said.
