Liu Minxia

    mllmx@msn.com

    AS gongs were struck on both sides of the border in a live videolinked ceremony, trading began yesterday on the Shenzhen-Hong Kong stock trading link in the latest step to widen access to mainland markets for global investors.

    Similar to a program that kicked off between Hong Kong and Shanghai two years ago, the long-awaited Shenzhen-Hong Kong Stock Connect allows investors in Hong Kong to buy 881 Shenzhen-listed stocks for the first time, and in return, mainland investors have access to 417 stocks listed in Hong Kong.

    Comparing cross-market links of this kind to bridges, Charles Li, chief executive of Hong Kong Exchanges & Clearing Ltd., operator of the Hong Kong stock exchange, said Hong Kong is surely benefiting from these programs and he hopes there will be more similar links in the future.

    “If the Shanghai-Hong Kong connect was our baby step on the first step, the Shenzhen connect is our second step. Now we can walk and we can begin to run. So this indeed is a historical moment,” he said.

    With a market value of US$3.3 trillion, Shenzhen’s exchange rivals Shanghai’s in size and is the world’s eighth biggest. While Shanghai is home to many huge State-owned enterprises, Shenzhen’s market, often referred to as China’s NASDAQ, is dominated by small, fast-growing companies in up-and-coming sectors such as technology and health care.

    Of the 881 stocks listed in Shenzhen that can be traded via the Hong Kong exchange, about 200 on the tech-heavy ChiNext are open to institutional investors.

    “Global investors are generally looking for further expansion of the stock link program as well as China’s economy,” said Wang Jianjun, general manager of the Shenzhen Stock Exchange. “In the first three quarters of the year, companies listed on the ChiNext board saw a 32.4 percent increase in revenue and a 44.3 percent surge in profits.”

    Among 417 Hong Kong stocks that mainland investors can get access to, nearly 100 are small caps, said Zhou Xiabing, an analyst with Ping An Securities. That might appeal to mainland investors looking to diversify away from assets denominated in the yuan, now at its weakest in eight years, he said.

    Expanding cross-market trading could help restore confidence in China’s markets as well as in the global economy, said Liu Shiyu, chairman of the China Securities Regulatory Commission.