Monday, September 28, 2020

China denies reports Shanghai-London stock connect is halted

Jan 04. 2020
File Photo: One person said that Britain's stance on the pro-democracy protests in Hong Kong was one of the issues that prompted the move.
File Photo: One person said that Britain's stance on the pro-democracy protests in Hong Kong was one of the issues that prompted the move.
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By Syndication Washington Post, Bloomberg · No Author 

China denied reports that a tie-up between the Shanghai and London stock exchanges has been halted.

The operation of a stock link between the two exchanges has been normal since June, the China Securities Regulatory Commission said in a media briefing on Friday. The regulator has noticed some companies delaying issuance of global depositary receipts and respects their freedom to decide a time based on financing needs and market conditions, spokesman Chang Depeng said.

"Shanghai London Stock Connect is an important initiative in China's financial opening, it is instrumental in expanding cross-border investing and funding channels bilaterally," he said. "Since June 2019, the link has been operating normally."

The Chinese government temporarily suspended the Shanghai-London Stock Connect program on political grounds, people familiar with the matter previously told Bloomberg. One person said that Britain's stance on the pro-democracy protests in Hong Kong was one of the issues that prompted the move. Reuters had previously reported the decision.

"It's good that the government will keep developing the scheme as it's a positive step for financial markets in both countries," Linus Yip, First Shanghai Securities strategist, said by phone. "The Shanghai-London stock connect needs to overcome lots of difficulties, including the long distance and time zone differences."

The link between the Shanghai and London exchanges was created to allow companies listed on one venue to issue shares on the other. It has so far underwhelmed with just a single Chinese company listing in London and no U.K. companies coming to the Shanghai bourse.

Brokerage Huatai Securities Co. was the first Chinese company to sell global depositary receipts in London last June. Its GDRs fell 1.7% in London as of 9:59 a.m. local time. The stock tumbled as much as 11% on Thursday, the biggest decline since their listing. SDIC Power Holdings Co. in December postponed its plan to sell GDRs because of "market conditions."

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