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New HK-Shenzhen Stock Exchange Link To Involve SMEs

by Mary Swire, Lowtax.net, Hong Kong
13 March, 2015

The General Manager of the Shenzhen Stock Exchange, Song Liping, has indicated that the proposed stock link between Shenzhen and Hong Kong, which is expected to be established this year, could focus on the trading of shares in small and medium-sized enterprises.

The new stock link is expected to be launched along the same lines as the Shanghai-Hong Kong Stock Connect (SHKSC) program, which was launched in November last year. The SHKSC is a mutual market access program that allows, for the first time, Mainland investors to trade stocks listed on the Hong Kong Stock Exchange (SEHK) directly through the Shanghai Stock Exchange (SSE), and for Hong Kong and overseas investors to trade stocks listed on the SSE directly through the SEHK.

Situated in the Pearl River Delta region in Guangdong province and close to Hong Kong, Shenzhen has been seen as the next logical place from which to build greater links between stock exchanges on the Mainland and Hong Kong. Earlier this year, Chinese Premier Li Keqiang confirmed that a Shenzhen-Hong Kong Stock Connect "should be next."

Song confirmed that approval for the new stock link can be expected to be granted in the first half of this year, to enable the initiative's launch in the second half of 2015. Preparatory work is currently being undertaken by Hong Kong and Chinese regulatory authorities.

It has been confirmed that the design and development of the necessary technology systems has been completed and approved by the two regulators. They are now focusing on operational and technical considerations, which will enable an announcement on implementation.

Song pointed out that, given the concentration on the Shenzhen Stock Exchange of stocks in SMEs, high-technology companies, and startup companies, it is expected that the link with the SEHK will be extended – depending on overseas investor demand – to include such stocks, as well as those of larger blue chip companies.


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