Hong Kong and Shenzhen Market Connection Set to Launch

The long trailed Shenzhen-Hong Kong Stock Connect program will launch on December 5. The tie up was originally scheduled for launch in 2015 but the turbulence in Chinese markets in January this year stalled the project. Will it work?

The new stock-trading link, which is comparable to the existing program between Shanghai and Hong Kong, will allow overseas investors to trade stocks on the Shenzhen Stock Exchange and offer China based investors greater access to the Hong Kong stock market.

With the mainland economy stalling and the currency weakening the new scheme is welcome and is as another action that will further open and liberalise the Chinese capital markets.

Tech Heavy Exchange

The Shenzhen Exchange is sometimes referred to as China's Nasdaq and the city itself is home to numerous Chinese tech companies like Tencent, Coolpad, OnePlus, and Huawei. 

In their joint statement on Friday, the regulators of the mainland and Hong Kong said arrangements for transaction settlement, investment quota management and technical preparations for the new trading link were well in place.

Carlson Tong «The expanded trading link will further strengthen mutual access between the Mainland and Hong Kong stock markets. Similar to the arrangements for Shanghai-Hong Kong Stock Connect, the two regulators have established mechanisms to protect the integrity of both markets under Shenzhen-Hong Kong Stock Connect,» said Carlson Tong, Chairman of the Securities and Futures Commission (SFC) Hong Kong (pictured)


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