Hong Kong-Shenzhen stock connect to begin trading on a Monday in November, says exchange chief

PUBLISHED : Thursday, 13 October, 2016, 9:03pm
UPDATED : Thursday, 13 October, 2016, 10:52pm

Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia said the soon-to-be launched Shenzhen and Hong Kong stock connect would start trading on a Monday after mid November.

This indicates the new connect scheme is likely to kick off on November 21 or 28.

“It will be a Monday,” Li said on Thursday at the stock exchange trading hall in Central after hosting a roadshow promoting the new connect scheme to brokers and fund managers.

“It is a tradition that the stock exchange would like to introduce any new scheme on Monday because this would provide a weekend for the back office staff of brokerages to do the preparation,” Li said.

Li said the scheme is likely to launch on a Monday after mid November because the Shenzhen and Hong Kong bourses would carry out system tests from October 17 until November 9.

“We will have testing to make sure all brokers are ready,” he added.

The stock connect scheme linking Hong Kong and Shenzhen will allow international investors to trade 880 Shenzhen stocks via Hong Kong brokers while mainland investors will be able to trade 417 Hong Kong stocks via mainland brokers.

It will be the second cross border scheme after the launch of the Shanghai and Hong Kong stock connect two years ago, under which international investors can trade 568 Shanghai listed A-shares and mainlanders can trade 266 Hong Kong stocks.

We will have testing to make sure all brokers are ready
Charles Li Xiaojia, HKEX

As a result of Shanghai-Hong Kong stock connect, mainlander fund flows now represent 10 per cent of Hong Kong turnover while international investor trades account for about 1 to 2 per cent of daily Shanghai turnover.

The joint Hong Kong-Shenzhen roadshows that kicked off on Thursday are a major effort to promote the connect scheme, Li said. After Hong Kong, the roadshows will go overseas. “Shenzhen and Hong Kong stock connect will improve the mutual market access between the Hong Kong and mainland markets and reinforce Hong Kong’s position as the leading offshore renminbi asset management centre,” Li said.

Shenzhen Stock Exchange chairman Wu Lijun said the approval of Shenzhen connect indicates that a solid step forward has been made in the international, legal and business development of China’s capital market.

“It also reinforces the cooperative relationship between the mainland and Hong Kong. Shenzhen stock exchange features innovative new-economy issuers, offering a unique asset class and expanding the scope of investment opportunities for overseas investors,” Wu said.

Li said the Hong Kong regulator would work on other potential connect schemes in commodities, currencies and other areas.