China Moves to Open up Stock Markets

China has signalled that it intends to give foreign investors greater access to its stock markets, while allowing cross-market stock investment by mainland and Hong Kong investors.

The China Securities Regulatory Commission (CSRC) did not divulge all of the details and said that it needs a further six months to prepare for the launch. However, a trial programme will permit mainland investors to trade shares of select companies listed in Hong Kong, while permitting Hong Kong investors to trade designated stocks trading in Shanghai.

Under the programme investors in Hong Kong can place up to CNY13bn yuan (US$2.1bn) per day into mainland shares, with a maximum cap of CNY300bn yuan. For mainland investors sending money to Hong Kong, the daily limit is CNY10.5bn capped at CNY250bn maximum. Purchases must be limited to dual-listed stocks and designated blue-chips, and mainland participants will initially have to be either institutional investors or retail investors with CNY500,000 in securities and cash.

The move is also designed to support the internationalisation of the yuan (CNY) and strengthen Hong Kong’s status as an offshore centre for the currency, the CSRC added in a joint statement with the Securities and Futures Commission (SFC) of Hong Kong.

In addition to the official announcement, the trial programme was mentioned in a speech by Chinese premier, Li Keqiang, on 10 April.

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