Huatai to kick off Shanghai’s cross-border investment channel with London on December 14
- Chinese investors will need to meet higher asset requirement of US$438,372 to trade under the link plan with London, versus US$73,075 for Hong Kong
The Shanghai Stock Exchange will start a link programme with its London counterpart on December 14, with Huatai Securities among the first batch of Chinese stocks to be tradeable by UK investors, as the world’s largest emerging market opens up further to foreign investors, according to sources familiar with the plan.
Huatai will issue a form of global depositary receipts (GDRs) in London, with Citigroup among the custodian banks that will oversee the conversion between the receipts and ordinary shares, said the people who requested anonymity because the information is not public. A Shanghai exchange spokesman declined to comment.
The programme, called the Shanghai-London Stock Connect, is among several cross-border channels that are in place since 2014 to keep China’s capital market ajar, allowing domestic investors to buy and sell stocks in Hong Kong, while letting global investors get a taste of the country’s listed equities. Most class A shares listed in Shanghai and Shenzhen are inaccessible to non-resident foreign investors, while Chinese day traders aren’t allowed to transact in overseas-listed equities due to China’s capital controls.
In addition to the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect channels, a Bond Connect is also being developed to integrate China’s bond investors with the global market.
The start of the long-awaited Shanghai-London channel comes three days before the 28th anniversary of the Shanghai bourse, as the exchange has spearheaded the Chinese government’s four-decade economic reforms and liberalisation. China’s stock markets, the world’s third-largest with a capitalisation of US$5.8 trillion, have also drawn increased attention from international money managers as they were added to MSCI’s global gauges for the first time this year and the regulator ramps up efforts to tackle issues raised by global investors.
