China temporarily suspends Shanghai-London stock plan

  • Markets
  • Thursday, 02 Jan 2020

Pedestrians walking past the Shanghai Stock Exchange building in Shanghai

SINGAPORE: China has temporarily blocked a link between the Shanghai and London stock exchanges, Reuters reported.

Politics, including Britain’s stance on Hong Kong protests, was behind the suspension of the Shanghai-London Stock Connect plan, according to the report, which cited five unidentified people involved in talks with Chinese officials. The China Securities Regulatory Commission and the Shanghai Stock Exchange did not immediately respond to Bloomberg requests for comment.

"I’m not aware of the specifics and would refer you to the competent authority and relevant businesses,” China foreign ministry spokesman Geng Shuang told reporters in Beijing Thursday.

"I would just like to stress that we hope the U.K. will provide a fair and just and open non-discriminatory environment for Chinese businesses to invest there, and we hope it will create a fair conditions for practical cooperation between the two countries.”

The London-Shanghai link was designed to allow companies listed on one venue to issue shares on the other. While an agreement for some sort of connection has been in the works since at least September 2015, the London end of the link only started in June last year -- and only a few companies have expressed interest. Time zones and rule differences made it difficult to attempt a trading link similar to those that mainland exchanged have with Hong Kong.

Brokerage Huatai Securities Co. was the first Chinese company to sell global depositary receipts in London last June. SDIC Power Holdings Co. in December postponed its plan to sell GDRs because of "market conditions.”

"It sounds like a low-cost way for the Chinese government to make a statement of its stance on the Hong Kong issue,” said Hao Hong, a strategist with Bocom International.

"It’s a symbolic move and I don’t expect it to have any impact on markets.”

A Beijing representative for the London Stock Exchange directed queries to the U.K. office when contacted by Bloomberg. A spokesman and a spokeswoman for the U.K.’s finance ministry declined to comment to Reuters. - Bloomberg

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