HONG KONG, Dec 20 (Reuters) – A long-awaited link between your stock exchanges of Shanghai and London got near to the launch pad last week, but there is no blast-off. After over three years of discussions, everything appeared set for a Dec. 14 release, with a ceremony in the British capital and an inventory by major Chinese brokerage. Nonetheless it was placed on hold then, and people acquainted with the problem said the postponement of the Shanghai-London Stock Connect would last at least one month. The London Stock Shanghai and Exchange Stock Exchanges got no immediate comment when asked when the Connect would launch.
A person in London knowledgeable about the problem said regulators still had a need to nail down some final rules. The hold off highlights troubles China faces in checking its capital markets. It bears echoes of Beijing’s aborted attempt this season to lure its overseas-listed technology giants home to market Chinese Depositary Receipts (CDRs).
That proceeded to go onto the backburner after smartphone maker Xiaomi in June suspended a well planned issuance. It could let companies outlined on either exchange sell Depositary Receipts (DRs) – bank-issued certificates representing possession of a place quantity of company shares that may be listed and exchanged independently from the fundamental stocks.
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The idea was Shanghai-listed companies would be able to raise funds in the united kingdom while British companies could broaden their trader base by selling stocks in Shanghai. Theoretically, this might build on the successful Connect techniques between Hong Kong and exchanges in Shanghai and Shenzhen that provide investors in a single usage of the other.
But when the London system gets under way, it shall face uncertainties about the development potential clients and exactly how much value it can add. Denting enthusiasm is how international investors currently have usage of Chinese shares via Hong Kong-listed, and New York-listed Chinese companies – as well as the China-Hong Kong Connects. Keith Pogson, global assurance leader, capital, and banking markets, at EY. Nicholas Chui, mature investment supervisor at Aberdeen Standard Investments in Hong Kong, says that with the “existing tube” between China and the world through Hong Kong, the story of the Shanghai-London Connects is “probably more incremental than revolutionary”.
Thus, goes by London-listed companies to sell CDRs will be more of the marketing gambit to raise their profile in China. To Chui, that can be worthwhile. There is curiosity about the Connect among Chinese firms. The largest delivery group, state-owned COSCO Shipping, is considering increasing capital in London, according to people familiar with the matter. Brokerage Huatai Securities was near to selling Global Depositary Receipts (GDRs), as approved by Chinese authorities, only to postpone it as some technical details weren’t ironed out.
On the other side, HSBC, outlined in Hong and London Kong, is looking into the probability of list CDRs in Shanghai. Another issue more likely to face the Connect will be trading volume. Bankers expect it to be low to begin with, pointing to the slow ramp-up for the Hong Kong-China Stock Connects. Jian Shi Cortesi, portfolio manager of Asian equities at GAM Investment Management.
Personally, I am in favor of anything which is not predictive and gets the overall weight affected by the current price of the security. Again, I cannot stress the idea that regardless of how attractive basics may be, there’s a true point of price indifference, accompanied by just pure and unrealistic optimism. Which is why I prefer to look at the existing facts, untainted and just plain Jane, and work following that.
Finally, and the least interesting of all perhaps, in my unexpected interest in preference shares. Although I was interested about any of it previously this week, it is again by another post by (The) Boring Investor that reminded me about why I used to be interested in them in the first place. I view them as a very small, but useful asset course to be highly considered for sale in the foreseeable future if they’re ever available and offered to retail investors. I shall sign off for the night, evening run and head to bed early skip my. The day for me personally at work tomorrow Long and early. How will I get anything done now with each one of these things floating around in my head?
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