China approves Shenzhen-Hong Kong stock stock exchange connection

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Liu Shiyu, the chairman of the China Securities Regulatory Commission, shakes hands with Carlson Tong, chairman of the Hong Kong’s Securities and Futures Commission (SFC) .

China’s State Council has approved plans to connect the Shenzhen and Hong Kong stock exchanges, Chinese Premier Li Keqiang said in remarks at a State Council executive meeting.

Individual investors in Hong Kong can trade the shares of companies listed in Shenzhen with their Hong Kong brokerage accounts, meanwhile, investors in mainland China would be able to use their local brokers to buy Hong Kong-listed shares, according to China Securities Regulatory Commission and Hong Kong’s Securities and Futures Commission’s joint announcement.

The plan will allow 13 billion yuan, or about $1.96 billion, a day to flow from Hong Kong to Shenzhen, and 10.5 billion yuan, or $1.58 billion, to flow from Shenzhen to Hong Kong.

“The roll-out of the Shenzhen-HK Stock Connect after that between Shanghai and Hong Kong marks another concrete step for China’s capital market towards one that is more law-based, market-oriented and global; it will generate many positive outcomes,” Li said.

The Shenzhen-HK Stock Connect will help investors share more of the dividends from economic growth on the Chinese mainland and in Hong Kong and promote closer partnership between the two markets while shoring up Hong Kong’s role as an international financial center, Li added.

In comments posted on a government website, Premier Li said that preparatory work for the Shenzhen-Hong Kong link had basically been completed, but he did not give details on the launch date.

However, a recent Weibo post by the China Securities Regulatory Commission said the official launch will be in four months.

The Commission said earlier in August it would launch the scheme sometime this year.

Story by Xinhua with information from the China Securities Regulatory Commission.