Stock ‘train’ raises concerns

SOME international and mainland financial institutions have expressed concern about the launch of the Shanghai-Hong Kong Stock Connect (滬港通) as many issues are yet to be clarified.

The Asia Securities Industry & Financial Markets Association said the trading debut could be delayed to late November due to uncertainty surrounding some technical issues and a lack of clarity over taxation.

It asked for its members to be given a month’s notice before the launch of the linkup, adding that banks would need time to calibrate trading systems and prepare client documentation once the details had been finalised.

Some mainland securities firms also did not expect to see the Connect launch in October, as the risk monitoring system remains unclear, and some brokers have not figured out how cross-border trading operates.

But Secretary for Financial Services and the Treasury (財經事務及庫務局局長) Ceajer Chan Ka-keung (陳家強) said Hong Kong is finalising preparatory work on its side and awaiting the launch.

The delay of the so-called stock through train may not have a direct connection to the Occupy Central (佔領中環) protests, and relaxing the daily conversion limit of 20,000 yuan (HK$25,358) per person is not a prerequisite for starting the trading link either, Chan said.

He noted the trading link is a pilot programme with restrictions, which may be adjusted in light of operations. For example, both bourses will strengthen cooperation in the development of cross-boundary derivative products after the launch.

Financial Secretary (財政司司長) John Tsang Chun-wah (曾俊華) earlier said he is unaware of the reason for the delay in the launch of Shanghai-Hong Kong Stock Connect.

He did not believe it is related to the Occupy movement, though Secretary for Commerce and Economic Development (商務及經濟發展局局長) Gregory So Kam-leung (蘇錦樑) suggested some overseas institutions would likely suspend investments in the SAR due to the current agitation.

Tsang, talking before he headed off for the Asia-Pacific Economic Cooperation leaders’ meeting in Beijing, said Hong Kong is ready for Stock Connect and is awaiting Beijing’s (北京) lead on the matter.

(Jennifer Li and Reuters, 23 October, 2014)