Hong Kong is working night and day to launch an initiative that will let global investors trade Chinese stocks from the city for the first time and secure the former British colony’s position among the world’s pre-eminent share markets.
The Hong Kong and Chinese governments agreed in April to allow international investors to trade Shanghai ‘A’ shares via the Hong Kong stock exchange while mainland investors will be able to trade Hong Kong ‘H’ shares via the Shanghai Stock Exchange, subject to quotas both ways.
To meet an October deadline, regulators, brokers and engineers in Hong Kong have shunted other projects to the bottom of their to-do list, delaying technology upgrades, putting off new product launches and pushing market reforms onto the backburner.
But the rush to launch the complex project risks a technology snafu that could lead to potential losses on investors’ portfolios, people in the industry say. They also worry that the Hong Kong and Shanghai financial industry may not be fully prepared by October.
“My concern is that some exchange participant firms won’t be ready, and many buy-side firms won’t be either, which means the first few months may be quiet as institutional investors wait and see how the initial implementation pans out,” said Stephane Loiseau, head of cash equities for Asia Pacific at Societe Generale.
“Everyone is trying to get ready to connect, even if the timeline is very aggressive,” said Loiseau, whose bank has a big group of staff working on the project.