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| Hong Kong Exchanges and Clearing Ltd. Chairman Chow Chung-kong (left), and Hong Kong Chief Executive Leung Chun-ying pose before beating a gong during the launch ceremony of the Shanghai-Hong Kong Stock Connect in Hong Kong Nov 17, 2013. (China Daily / Roy Liu) |
SHANGHAI/HONG KONG - A landmark stock trading link program allowing Hong Kong and Shanghai investors to buy and sell shares on each other's bourse is officially launched on Monday, marking the start of one of China's most significant moves to further open its capital markets.
Hong Kong's Chief Executive C Y Leung welcomed the launch saying the program will increase the competitiveness of both stock markets and enhance Hong Kong's status as a major offshore RMB trading hub.
"It is a breakthrough in the opening up of China's financial markets and an important milestone in the development of Hong Kong as a unique gateway between the mainland and international investors," Chairman of the Hong Kong Exchanges and Clearing Limited CK Chow said at the inauguration.
Much of the cash flow from the so-called Stock Connect scheme is expected to be northbound initially, with foreign investors on the Hong Kong Exchange snapping up mainland shares under a daily quota of 13 billion yuan.
The expected fund inflow has helped push the SSE180 Index and the SSE380 Index - the two main Chinese destinations for foreign investments through the scheme - up over 10 percent and 6.5 percent since late last month.
Southbound investment, capped by a daily quota of 10.5 billion yuan, is likely to be less active, with few mainland investors yet to sign up to the scheme.
Over the longer term, however, it could boost the average daily value of stock trading in Hong Kong by about 38 percent by 2015, French bank BNP Paribas estimates, and may ultimately lead to the creation of the world's third largest stock exchange.
China's Ministry of Finance along with its securities watchdog said Friday that mainland individual investors' profits from investing in Hong Kong-listed stocks will be exempt from personal income tax from Nov. 17, 2014 to Nov. 16, 2017.
According to a report by the Securities Times, the news about the program has pushed up H shares since last month, and the connect is expected to bring challenges and opportunities to the relatively less open A shares.
