Shanghai-Hong Kong Connect: China’s big game changer

The Shanghai-Hong Kong Connect programme will open up the world's fifth largest economy to foreign investors.

"An important horizon [has] opened up on the global investment landscape," says Leo Lewis in The Times: domestic Chinese stocks.

Shanghai-listed shares (known as A-shares, to distinguish them from Hong Kong-listed mainland firms or H-shares) have hitherto been largely inaccessible for foreign investors.

But now anyone purchasing stocks in Hong Kong (open to all foreign investors) will be allowed to buy into 500 or so A-shares, with a total market capitalisation of around $1trn.

At the same time, Chinese retail investors will be given access to Hong Kong shares. There will be a daily quota of around $35bn of cross-border equity purchases.

The Shanghai-Hong Kong Connect programme is a "big game changer", as Christina Ma of Goldman Sachs put it.

Not only can foreigners now enter the world's fifth-biggest stockmarket, but index providers such as MSCI will be more inclined to cover China, thus bringing in money from funds that invest in Asia.

All this, along with cheap valuations, helps explain why the Shanghai Composite index has gained 17% this year.

Investors expect the scheme to expand to the Shenzhen stock exchange in due course. Shanghai and Shenzhen together form the biggest stockmarket outside the US.

Recommended

I wish I knew what an emerging market was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what an emerging market was, but I’m too embarrassed to ask

This week's “too embarrassed to ask” explains what emerging markets are, and why you might want to invest in them.
9 Sep 2020
Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Beware the hidden risks when investing in emerging markets
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019

Most Popular

Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
IAG's share price is ready for take-off - here's how to play it
Trading

IAG's share price is ready for take-off - here's how to play it

The owner of British Airways has had a turbulent year, but is now worth a punt. Matthew Partridge explains the best way to play it.
8 Sep 2020