In a significant step towards opening
China’s capital markets to foreign investment, trading link between Hong Kong
and Shanghai will be launched on Monday, November 17.
The so-called Stock Connect trading
scheme could boost the average daily value of stock trading in Hong Kong by
about 38 percent by 2015 and may ultimately lead to the creation of the world’s
third largest stock exchange.
The move had already fueled an unusual
rally among China’s largest listed companies, which have long been out of favor
and blamed for the market’s doldrums in recent years.
The project will at the same time
provide a channel for Chinese savers to start moving some of the $8 trillion of
private wealth currently in deposits into overseas stocks.
The announcement comes as China is
making a big push to widen the use of the yuan, with Canada and Malaysia
becoming the latest addition to a growing list of trading hubs for the
currency.
China already operates several
cross-border investment schemes but these are restricted to specific firms that
must apply for a license to participate.
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