Shanghai-London stock link ready

Added 26th April 2016

An agreement for the Shanghai-London Stock Connect is expected to be signed in September, according to local reports.

Shanghai-London stock link ready

In the initial stage, no more than 10 Shanghai-listed A-shares with the largest market capitalisation will be listed on the London bourse by issuing global depositary receipts (GDRs), the Hong Kong Economic Journal reported on Monday, quoting unnamed Chinese fund managers as sources.

The companies will most likely be state-owned banks, such as ICBC, oil giants such as PetroChina and insurers like China Life Insurance, the report said.

The London-listed FTSE 100 Index constituent stocks may also issue GDRs to float on the Shanghai bourse. Potential ones include HSBC, Royal Dutch Shell and Unilever.

A long-term aim of the Shanghai Stock Exchange is to attract GDR issuance from US or European companies, the report said.

At the moment, mainland investors can invest in overseas stocks through the Shanghai-Hong Kong Stock Connect, the qualified domestic institutional investor (QDII) scheme, or the mutual recognition of funds program, all with quota limits.

The London link proposal is likely to be unveiled in September before the G20 meeting in Hangzhou, the report said, so that China can showcase its steps to open its financial markets.

The plan follows the launch of Shanghai-Hong Kong trading link in November 2014.

Last year, the Shenzhen-Hong Kong connect scheme was expected to launch, but the debut was put off due to strong market volatility. An announcement of the offical opening in October is expected to be issued in July, the report said.

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