A stock market link between Hong Kong and Shenzhen would expand a similar program with Shanghai that started last November. Photo: Bloomberg
China’s central bank said an exchange link between Shenzhen and Hong Kong will start this year, despite widespread expectations that the plan would be delayed after the recent US$5 trillion selloff in the world’s second-largest stock market.
People’s Bank of China governor Zhou Xiaochuan signaled that the launch will take place this year in a lengthy article that appeared on the PBoC’s website on Tuesday, Bloomberg reported.
Although there was no official confirmation by mainland or Hong Kong securities regulators, Zhou’s comments sparked rallies on both sides of the border.
A stock market link between Hong Kong and Shenzhen would expand a similar program with Shanghai that started last November.
“As we accelerate the nation’s opening of trade and investments, we need to speed up the opening of the financial sector,” Zhou wrote in the article.
“This year the Shenzhen-Hong Kong connect will be launched; this will show a new channel between China’s capital markets and the world has opened,” he said.
Signs of stabilization in Chinese markets may give authorities more confidence to push forward with the link.
The Shanghai Composite surged 11 percent in October, one of the biggest gains worldwide, amid signs of buying from ordinary investors, rather than the government-run funds who sought to prop up prices during the rout, Bloomberg said.
Margin debt rose last month for the first time in five months, volumes have picked up and companies favored by individual investors are leading the rebound, the report said.
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