Shenzhen gov't considers cross-market proposal

By Sun Zhe

A proposal to introduce cross-market listing between the Shenzhen Stock Exchange (SZSE) and Hong Kong Stock Exchange (HKEx) was drafted by the Shenzhen government, Caijing magazine's website reported yesterday.

Song Guoliang, a professor at Beijing-based University of International Business and Economics, said there may be some bumps but many investors would welcome it.

“If the proposal is to be approved, B shares listed on the SZSE, which is denominated in Hong Kong dollar, will be listed in Hong Kong, and H shares from HKEx will be allowed to be listed on the SZSE,” Song said.

When asked what perspective HKEx held for the proposal, Lorraine Chan, the HKEx spokesman, said in an e-mail that the HKEx supported further studies of any cross-market cooperation proposals.

“However, the implementation of the proposal would be subject to the presence of special arrangements for renminbi exchange and approval by relevant mainland departments, including the China Securities Regulatory Commission and other concerning regulators,” Chan said.

Song said that the proposal would be good news for foreign investors, as it would be more convenient for them to register in Hong Kong and invest in B shares, which was originally set up for foreign investors, but mostly traded by mainland investors.

“The difference in the trading rule of the two markets may hobble the cooperation,” Song said.

The proposal also touched the issue of red-chip shares – stocks of mainland companies that are registered in Hong Kong – to get listed in SZSE on a trial basis.

H shares refer to shares of companies based on the Chinese mainland and listed in Hong Kong.
 

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