Shanghai London link `for September start'

Business | 26 Apr 2016

The Shanghai-London stock link will be rolled out in September, with global depositary receipts initially in use to gauge market reaction, Hong Kong Economic Journal reported.

No more than 10 Shanghai-listed Chinese companies, with the largest capitalization, will issue GDRs to be listed on the London bourse, the report said yesterday.

A GDR is a bank certificate issued in more than one country for shares in a foreign company.

Shares are held at the venue of issue by the local branch of an international bank and traded as domestic stocks.

Chinese banks, insurers and oil companies may be included in the first batch of GDR issues. The number of shares to be issued depends on the needs of companies. FTSE 100 Index constituent stocks, including HSBC Holdings (0005), British American Tobacco and drug maker GlaxoSmithKline, will also trade on the Shanghai exchange.

That China's domestic investors will be able to directly invest in foreign stocks, without going through the Hong Kong bourse, marks a breakthrough.

Hong Kong Exchanges and Clearing (0388) fell 2.1 percent to HK$199.70 yesterday, steeper than the 0.76 percent dip of the Hang Seng Index.

Separately, Credit Suisse said it expects a trial of the Shenzhen-Hong Kong stock connect scheme to be staged in the middle of the year.

The two bourses may be linked to each other in the second half, it said.

It forecasts six small-cap stocks, with bright growth prospects, to be offered to mainland investors through the scheme. They include China Harmony New Energy Auto (3836), Wisdom Sports (1661) and Peak Sport Products (1968). DAISY WU

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