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

Emerging markets fall behind their developed-world counterparts
Emerging markets

Emerging markets fall behind their developed-world counterparts

While developed-world markets look forward to a recovery, emerging market stocks have tumbled as foreign investors pull out cash.
16 Apr 2021
Four of the best investment trusts for investing in emerging markets
Investment trusts

Four of the best investment trusts for investing in emerging markets

Investors need to tread very carefully in this risky sector. Here are the best ways to approach it
22 Mar 2021
Storm brews in emerging markets as investors pull cash out
Emerging markets

Storm brews in emerging markets as investors pull cash out

Foreign investors have begun to pull cash out of emerging markets as they begin to look less attractive when compared to the rising return from holdin…
12 Mar 2021
Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021