HKEx-Shanghai Stock Sale Curb Shows China’s Rules Apply
Investors using the Hong Kong-Shanghai exchange link to access China’s $3.6 trillion stock market will have to play by mainland rules.
Traders who want to sell Shanghai-listed shares must transfer the securities to a broker before 7:30 a.m. to comply with Chinese regulations. The rule is more restrictive than the T+2 settlement system used in Hong Kong and other major stock markets.
Pressure is increasing on Hong Kong and mainland authorities to provide clarity on trading rules before the link, which will give foreigners unprecedented access to the biggest emerging stock market.
Authorities said in April the link would start in about six months. The exchanges agreed to allow as much as 23.5 billion yuan ($3.8 billion) of daily cross-border trading, opening up the mainland market further to foreigners while giving wealthy Chinese investors a route to buy Hong Kong stocks.
Overseas institutions and investors will be able to trade shares on the SSE 180 Index (SSE180) and SSE 380 Index, as well as dual-listed stocks, via Hong Kong brokerages, the city’s government said April 10.
Policy makers still haven’t spelled out whether foreign investors in Chinese stocks will be subject to a tax on capital gains. MSCI Inc., which kept mainland shares out of its global indexes in June, says the lack of clarity on tax policy is one of investors’ biggest concerns.
The Shanghai Composite Index (SHCOMP) has climbed 11% since March 20 amid speculation government stimulus will boost economic growth and the exchange link will lure arbitragers to mainland shares trading at a lower prices than their Hong Kong-listed counterparts.
Source: bloomberg
