CHINA approved brokerages, including Central China Securities Co., to offer trading services that pave the way for the start of a program allowing investors of the Shanghai and Hong Kong stock exchanges access to each other’s stock markets.

    Central China’s Hong Kong-listed shares yesterday surged after it won approval from the Shanghai exchange to offer services enabling the trade of yuan-denominated A shares under the Shanghai-Hong Kong stock connect program. Brokerages from China Galaxy Securities Co. to Haitong Securities Co. also received permission, Shenzhen-based Securities Times reported yesterday.

    The link, part of China’s effort to open up its financial system and promote wider use of the yuan, will allow a net 23.5 billion yuan (US$3.8 billion) in daily cross-market trading. The Shanghai Composite Index gained 12 percent this year on speculation the exchange link may fuel fund inflows and reform measures will stem an economic slowdown.

    “For those brokers, shareholders are banking on more market share, which means more commissions and profit,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud (Asia) Ltd. “The Hong Kong-Shanghai connect would increase turnover on both sides.”

    The trading link, hailed as a milestone to open up China to global investors, is expected to start Oct. 27, domestic and foreign media have reported.

    (SD-Agencies)