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WorldJune 2 2014

Shanghai-Hong Kong Stock Connect: a mutually beneficial arrangement

The Shanghai-Hong Kong Stock Connect will foster stock trading and capital flows between Hong Kong and mainland China, with numerous potential benefits for both sides. But competitors in the Asia-Pacific region are concerned it might eat into their market share. 
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Shanghai-Hong Kong Stock Connect: a mutually beneficial arrangement

The Shanghai-Hong Kong Stock Connect created a strong air of excitement in the Asian markets and beyond when it was announced in April. Once launched, the initiative will connect the Stock Exchange of Hong Kong with the Shanghai Stock Exchange, allowing mutual market access in designated equities, considerably enhancing the financial links between the former UK colony and the Chinese mainland.

The connect opens a path to the Shanghai Stock Exchange for all Hong Kong and overseas investors, but only institutional investors and those with an aggregate balance of Rmb500,000 ($81,000) or more in their securities and cash accounts will be allowed to trade from the mainland side of the system into Hong Kong. The potential benefits of the connect are numerous for both sides and many in the markets are looking forward to the implementation of the system with serious enthusiasm.

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