Shanghai, Hong Kong exchanges to establish trading link

The Shanghai and Hong Kong stock exchanges are conducting final tests and rehearsals ahead of the initial launch of a trading link between the two exchanges. The pilot program -- dubbed Shanghai-Hong Kong Stock Connect -- will establish mutual stock market access between mainland China and Hong Kong. In April, when plans for the program were first announced, the two exchanges said it would take about six months to complete preparations, which would put a formal launch date around October.

The program represents another major push in China's ongoing efforts to open its capital markets to overseas investors and increase its market-oriented reforms. Foreign exchange controls have restricted overseas investments in the country, and it was only until the Qualified Foreign Institutional Investor (QFII) Scheme was introduced in 2002 that foreign investors were granted direct access to China's capital market. Under QFII, only institutional investors that meet certain criteria can qualify for a QFII license. Shanghai-Hong Kong Stock Connect would expand access to the Shanghai stock exchange to all Hong Kong and overseas investors. ...