Link Opens Between Hong Kong and Shanghai Stock Markets
By Alexandra Stevenson

HONG KONG — China took a leap into the international markets on Monday, allowing mainland residents to trade shares in Hong Kong for the first time and foreigners to invest in Chinese companies that had largely been off limits.

Investors hope the pilot program that links the Shanghai and Hong Kong stock exchanges will be the first step in an easing of tight restrictions on the flow of money in and out of mainland China, the world’s second-largest economy, behind the United States.

The so-called Stock Connect will strengthen the two cities’ roles as global financial centers and open the door for foreigners to a $4.2 trillion pool of capital. Speaking at the opening ceremony for Stock Connect in Hong Kong, Charles Li, the chief executive of the Hong Kong Stock Exchanges & Clearing, called it the start of a new era.

Orders for mainland stocks from investors in Hong Kong came thick and fast in the first few minutes of the trading day. By early afternoon, foreign investors buying stocks in Shanghai had reached the daily limit for trading of 13 billion renminbi, or $2.1 billion.

“This is the biggest milestone in China’s continuing liberalization of its markets,” said Michael Karbouris, head of business development for the Asia Pacific region at Nasdaq. “In a nutshell, the opportunity is China,” he added.

The trading move, which has elevated China’s capital markets to the global stage, comes as China is quietly expanding its financial ties with neighbors like South Korea and Australia through new trade deals.

Stock Connect, first announced by Premier Li Keqiang of China in April, is significant because foreign investors have been largely locked out of China’s financial markets. Until Monday, they could trade only the stocks of certain companies listed in China through a limited program that allowed just a drip of money into the country.

Now the tap has been opened wider.

But China’s vast markets are still mostly cut off from foreign investors; they will be allowed to trade only a small percentage — the daily $2.1 billion limit — of the Shanghai stock exchange market capitalization.

Still, the development is a boon to investors, banks and brokerage firms that have positioned themselves in recent months to benefit from the rush of requests to trade stocks on both sides of the border. In recent weeks, brokerage firms such as Credit Suisse and Macquarie Securities have announced initiatives to provide new research to investors.

Hedge funds and bigger institutional investors have also been waiting at the gates, expanding their Asia teams and preparing to be the first to take advantage of Stock Connect’s debut. They were among the most active participants in transactions on the Shanghai exchange on Monday.

Chinese retail investors, on the other hand, were largely absent from trading of shares listed in Hong Kong. “Foreign institutions are better prepared, and they have been studying Asia stocks carefully,” Lu Wenjie, an equities analyst at UBS, said, adding that Chinese retail investors were unlikely to have done the same preparation work.

The Chinese government has made gestures in recent weeks to indicate it is serious about opening itself to the world. Last Monday, the central bank eased the band around the renminbi, allowing the currency to rise by the most in one day since it scrapped an informal peg to the dollar in 2010.

And just days before the introduction of Stock Connect, China’s Ministry of Finance said that international investors would be exempt from a capital-gains tax, while also giving mainland investors a three-year grace period from paying the tax.

In a separate move last week, the Hong Kong government got rid of a daily cap on how much renminbi local residents can buy, helping to deepen the pool of currency outside China.

Stock Connect is part of a broader package of overhauls announced by President Xi Jinping last year but viewed with some skepticism after some initiatives like new and planned free-trade zones failed to take off this year.

On Monday, the financial community in Hong Kong was quick to temper high expectations as the initial gains of both the Hong Kong and Shanghai exchanges quickly fizzled and the HSCEI index, which tracks the shares of mainland Chinese companies listed in Hong Kong, fell nearly 2 percent.

Both the Shanghai and Hong Kong benchmark indexes finished the day in the red.

Brokers echoed comments made by Mr. Li of the Hong Kong exchange last week, highlighting the possibility of road bumps on Stock Connect. Referring to the two-way trading program as a historic train, Mr. Li said, “Whether the initial trains are sold out with large crowds left on the platform or the train departs with some empty seats may not be as important.”

The success of the program, he added, would be “measured in years, not days or weeks.”

滬港通 陸向國際躍進一步

大陸的滬港股票市場交易互聯互通機制（簡稱滬港通）十七日上路，紐約時報報導，藉由這項政策，大陸又在國際市場躍進一步。

紐時說，投資人冀望這項新政策會是大陸放寬資金流動限制的第一步。交易首日頭幾分鐘，香港投資人下單多且快，中午過後，外國投資人於上海購買股票已達每天交易上限一百卅億人民幣。

大陸正透過新的貿易協議，悄悄擴大與鄰國南韓、澳洲的金融關係，而滬港通又將大陸的資本市場提升到國際舞台。紐時指出，最近幾周，大陸當局作出許多動作，顯示其積極對外開放，包括上周大陸央行放寬人民幣浮動範圍，且讓經由滬港通投資的外國人免除資本利得稅，大陸投資人也緩課資本利得稅三年。

香港當局上周取消香港居民每日購買人民幣限額，也有助增加境外人民幣數量，讓人民幣國際化。

紐時報導，滬港通是一大重要政策，因為在此之前，外國投資人均被拒於大陸金融市場門外，僅能投資在大陸上市的特定幾家公司的股票，如今這個開口已擴大些。不過，大陸的龐大市場仍大致將外資隔絕在外，例如外資的交易比率低，每天僅一百卅億人民幣。

儘管如此，滬港通對最近幾月亟於在滬港購買股票的投資人、銀行、券商仍是大好消息。

避險基金和大型的機構投資人也等著搶搭滬港通的列車。這些人是十七日上海股市交易最活躍的投資人。至於大陸的散戶，十七日對投資香港上市公司股票則不積極。

原文參照：
http://dealbook.nytimes.com/2014/11/16/link-opens-between-hong-kong-and-shanghai-stock-markets/

2014-11-18．聯合報．A2．焦點．編譯王麗娟