Jan 04, 2019 (China Knowledge) - The highly anticipated Shanghai-London stock connect may only be able to be launched in the second half of this month with possibilities of it being delayed further.
One main reason for the delay is cited to be the impending exit of the United Kingdom from the European Union which will likely only be able to take place during the second half of the month at the earliest.
While overall preparations for the conversion system to be used in the trading of stocks on the stock connect has been done, there is still a need to monitor how the Brexit will proceed. In addition, there are also concerns on the regulation of capital flows and possible currency turbulences coming up.
Under the stock connect, companies listed on the Shanghai stock exchange will be able to raise funds from London while British companies will be able to be purchased by Chinese investors though they will not be able to raise new funds.
Huatai Securities is currently set to be the first company to raise funds from the stock connect with HSBC also having plans to issue Chinese Depository Receipts through the scheme. Similarly, a number of companies have already expressed interest in joining the stock connect scheme.
Although highly anticipated, large transaction volumes are expected when the stock connect first launches as other infrastructure such as primary issuance, market conditions as well as secondary market mechanics require time to develop and evolve.
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