This year will witness a sea change in China's capital markets. The introduction of the Shanghai-Hong Kong Stock Connect programme last November and plans for a pilot Shenzhen-Hong Kong link later this year demonstrate that China is serious about integrating further with international capital. Moreover, international investors are poised to seize upcoming opportunities to broaden their economic interests in the region.
Charles Li, CEO of Hong Kong Exchanges and Clearing, said that after the link with Shenzhen is established, the Hong Kong bourse intends to connect with the China Financial Futures Exchange, Dalian Commodity Exchange, Shanghai Futures Exchange and Zhengzhou Commodity Exchange, among others. The stock connect model could also be replicated for other asset classes.
The development of these programs would truly make Hong Kong the gateway to mainland China. The programs will also facilitate derivatives trading in the region. In March, Singapore Exchange opened a derivatives trading office in Hong Kong to capitalise on China's increasingly accessible capital markets. The diversification of yuan-denominated products will continue to enrich the financial ecosystem of the region.
The stock connect programs will also add value to the exchanges of both mainland China and Hong Kong, which are poised to develop investment products and services catering to the combined systems of the capital markets of greater China. The stock connect programs are capable of creating unique revenue sources for the bourses befitting the needs of local and international investors.
Read the full article here.