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在线翻译:
szdaily -> Opinion -> 
Stock link starts historic journey
    2014-11-24  08:53    Shenzhen Daily

    Lin Min

    linmin67@126.com

    THE long-anticipated and much trumpeted Shanghai-Hong Kong Stock Connect program concluded a week of disappointingly light trading after its launch last Monday despite high expectations by investors.

    The program allows Hong Kong and foreign investors to invest directly in Shanghai-listed shares and mainland investors to buy Hong Kong stocks both for the first time.

    In the first five trading days, international investors snapped up a net 23.64 billion yuan (US$3.86 billion) worth of stocks on the Shanghai Stock Exchange while mainland investors made net purchases of 2.928 billion yuan from the Hong Kong bourse. This means trading was only a fraction of the quotas under the program, 13 billion yuan for international investors and 10.5 billion for mainland investors, each day.

    Southbound trading was particularly insignificant, with mainland investors buying 16.8 percent of their daily allowance of Hong Kong stocks on the first day of the program and then 7.6 percent on the second. The cold response on the mainland side toward the program has been attributed to poor market performance in Hong Kong, mainland investors’ unfamiliarity of Hong Kong market and higher fees for cross-border trading.

    Despite the less-than-enthusiastic first week, the program should not be deemed a failure. In the long run, the program will play an important role in making the yuan an international currency and liberalizing the mainland’s financial markets. Hong Kong lifted long-standing currency conversion limits last Monday, allowing residents of the territory to freely convert other currencies to yuan.

    Xiao Gang, head of the China Securities Regulatory Commission (CSRC), hailed the program as a “major institutional innovation” in capital markets that heralds a new model for cross-border securities investment. What he said was no overstatement.

    Because the yuan is not freely convertible under the capital account, the mainland stock markets have been largely closed to international investors, and most overseas stock markets are off-limits to mainland investors. The Hong Kong-Shanghai stock link program will serve as a controlled conduit linking the Shanghai bourse to the international markets.

    With most large-cap blue chips on the Shanghai market now traded below international valuations, the program will attract more international funds to Shanghai and help secure a bull market. It will also benefit international investors with easier access to the US$3.9 trillion A-share market. The link will also help mainland stock markets, which are still in a nascent stage compared with developed markets overseas, to mature with higher degrees of transparency and fairness, as well as improve corporate governance and investor protection.

    With the Shanghai market outperforming the Hong Kong market this year, the program’s southbound trading may remain in thin volumes in the near future, but that may change when the Hong Kong stock market picks up and investors begin to discover trading opportunities in Hong Kong.

    An analyst cited by Xinhua said that if the Hong Kong stock market is connected to both Shanghai and Shenzhen bourses, it would represent a big step forward toward creating the world’s second-largest stock market, with a combined market capitalization of over US$7 trillion.

    Now it’s time for the Shenzhen stock exchange to speed up discussions for linking up with Hong Kong.

    “China’s capital markets now face rare, historic opportunities,” CSRC chief Xiao said. Years from now, it will be clear that his statement was no mere cliché.

    (The author is head of the Shenzhen Daily News Desk.)

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