- Title: Shenzhen-Hong Kong stock connect launches
- Date: 5th December 2016
- Summary: ***WARNING CONTAINS FLASH PHOTOGRAPHY*** STOCK CODES ON SCREEN VARIOUS OF MEDIA GATHERED
- Embargoed: 20th December 2016 06:53
- Keywords: China Hong Kong Shenzhen stock connect Shenzhen-Hong Kong stock market Shenzhen-Hong Kong connect stock
- Location: HONG KONG / SHENZHEN CITY, GUANGDONG PROVINCE, CHINA
- City: HONG KONG / SHENZHEN CITY, GUANGDONG PROVINCE, CHINA
- Country: China
- Reuters ID: LVA0085BLWCHX
- Aspect Ratio: 16:9
- Story Text: A long-awaited stock link between China's booming Shenzhen and neighbouring Hong Kong's stock markets launched on Monday (December 5), giving foreign investors access to some of the fastest growing private-owned companies in the world's second biggest economy.
The link comes two years after regulators approved the Shanghai-Hong Kong stock connect scheme and extends China's efforts to open up its vast capital markets even as it struggles to enforce curbs on speculative money that was blamed for triggering last summer's stock market crash.
The Shenzen opening - hobbled by delays of almost a year - connects all of China's stock markets, which with a combined market cap of over $5 trillion serves up plenty of investment opportunities for foreigners and speculators
"If Shanghai Connect was our baby step and the first step, Shenzhen Connect is our second step. Now we can walk and then we can begin to run," said Charles Li, the CEO of Hong Kong's Exchanges and Clearings Limited.
Hong Kong's Chief Executive Leung Chun-ying was the guest of honour at the launch on Monday and said the new exchange would be key in bolstering Hong Kong's position as "an international financial centre and a global offshore Renminbi business hub." as an even bigger international financial hub.
At the official launch ceremony in Shenzhen, which was broadcast live at the Hong Kong Stock Exchange, the chairman of China's Securities Regulatory, Liu Shiyu, reiterated Beijing's commitment to the link, saying it exemplifies "the great attention and care paid by the central government led by President Xi Jinping to strengthening and promoting Hong Kong's status as an international centre."
"Amid the instability and uncertainty of the international financial market, the Shenzhen-Hong Kong Connect that was launched today will inject positive energy, confidence and faith into the international and domestic financial markets," he added.
China's indexes tumbled on Monday as investors worried about the broader implications of the Italian referendum on the global markets and stern comments over the weekend by the chairman of China's markets' regulator regarding leverage buy-outs.
China's blue-chip shares index posted its biggest fall in six months on Monday after the top securities regulator warned against "barbaric" share acquisitions, though small-caps held relatively firm as an investment scheme linking the Shenzhen and Hong Kong markets went live.
Mainland markets were badly hit. The Shanghai market fell more than 1 percent while the blue-chip index slumped more than 1.3 percent. A broader Asian market gauge was down 0.3 percent.
Hong Kong stocks also felt the brunt though the impact was a bit muted. The main index in Hong Kong slipped 0.15 percent while the Hong Kong China Enterprises Index fell as much as 0.5 percent in early trade.
As expected, small caps were the early beneficiaries of the stock connect scheme with the Hong Kong small cap index rising 0.5 percent, bucking the broader downturn in the markets.
In the mainland, the ChiNext sub index, which is the U.S. equivalent of the Nasdaq, was up 0.4 percent.
Market analysts said investors were looking to rotate into small-caps on the connect scheme and away from the blue-chips on the stern comments by the regulator.
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