CRI听力:Landmark Shanghai-HK Stock Connect Debuts

The historic Shanghai-Hong Kong stock connect has officially opened today, with signs that more money is flowing from Hong Kong to Shanghai than the other way around.

CRI's Hong Kong correspondent Li Jing has the story.

A landmark trading link between Hong Kong and Shanghai's stock exchanges is expected to see billions of dollars in daily cross-border transactions and open up China's equities markets.

The pilot program enables investors to trade eligible shares listed on the other's market through local securities firms or brokers.

During the launching ceremony, Hong Kong Chief Executive CY Leung said that Hong Kong should further enhance its status as an international financial center with the combined advantages of "One Country" and "Two Systems".

"We also offer the unique feature of being part of China and yet outside the Mainland. We are therefore the "super-connector" between the rest of the country and the rest of the world. Stock Connect aligns the Mainland market with the international markets and is the upgraded version of Hong Kong as the super-connector to and from China."

The daily quota of 13 billion yuan, or about 2 billion US dollars, that can be invested in Hong Kong on mainland stocks had already been used up by mid-day. Meantime, less than 20 per cent of the daily quota of 10.5 billion yuan for mainland investors to spend in Hong Kong had been used by mid-day.

Charles Li Xiaojia, CEO of Hong Kong Exchanges and Clearing, says trade volume is only one of the factors that should be considered.

"At this point, safety, smooth travel is much more important than how many cars are actually across the bridge. The most important thing is that people know how to use it, people trade, people have great expectation to it, and their actual trading experience is pretty consistent with their broader old trading experience."
 
Joshua Crabb, head of Asian Equities with Old Mutual Global Investors, says the project is a good opportunity for global investors as it opens up the capital market.

"Does it benefit A or does it benefit H? I don't think that's the really important question, and I'm not even sure I really know the answer to that. But what it does mean is that it will be a bigger opportunity set, and you can invest in companies you couldn't invest before, you should buy them and you'll benefit. "

According to the latest tax rules, mainland individual investors' profits from investing in Hong Kong-listed stocks will be exempt from personal income tax for three years.

Individuals and companies in Hong Kong buying shares in Shanghai will be temporarily exempted from the tax on gains for an unspecified period.

Also from Monday, authorities have removed the cap on the daily amount of RMB a Hong Kong resident can buy or sell.
The 20,000 yuan cap had been in use for ten years.

For CRI, this is Li Jing in Hong Kong.