Stock connects to tie up China's mainland, HK capital markets: HKEX's Li

The Shanghai-HK stock connect and the imminent Shenzhen-HK stock connect are "pure" investment tools and will tie up the Hong Kong and mainland capital markets, Hong Kong Exchanges and Clearing (HKEX) chief executive Charles Li said on Thursday.

The core in the two links is cross-border trading, rather than cross-border clearing or settlement, he told a forum on Shenzhen-Hong Kong stock connect.

He explained that if overseas investors bought Shanghai stocks and sold them through Shanghai-HK stock connect, their money will go back to Hong Kong and they can not get their money out in Shanghai to invest in local property, and vice versa.

The two connects are designed in a safe and closed way to control risks, he said.

The Shanghai-Hong Kong stock connect was launched in November 2014 to allow international investors to buy A-shares in Shanghai via Hong Kong stock brokers, while mainland investors can invest in Hong Kong stocks via mainland brokers, under daily quota.

The new link between Shenzhen and Hong Kong stock markets was approved by the State Council in August, but the authorities are yet to announce a specific launch date.

All parties involved in stock markets are well prepared for the launch of the new cross-border trading scheme and waiting for "the starting gun," said Li.

He told the forum that in the next two decades, Hong Kong will serve as a center to help manage mainland investors' fortunes after it has served as a center to bring capital into China in the past two decades.

HKEX will attract more international firms, especially new-economy firms, to list in Hong Kong to sharpen the stock market's competitive edges to attract more mainland investors, Li added. Endit