By Charles Li, chief executive of Hong Kong Exchanges and
The Shanghai-Hong Kong Stock Connect has now launched. More
than a year of discussions and months of intensive market
preparations culminated in the opening gong on Monday morning,
and the flow o funds directly between the Hong Kong and
Shanghai markets for the very first time.
People on both sides of the boundary are excited about the
launch, and are eager to see how much is invested northbound
and southbound, how quickly quotas are used up, if
international investors can get used to pre-trade checking
requirements, and more.
The newspapers and media reports are awash with predictions
from market analysts. Some expect there to be substantially
more funds flowing north to Shanghai, while others predict
Mainland investors will flood Hong Kong's market. Some think
the quota is too small and will be used up quickly, while
others might think initial trading will be light. With
such a wide spectrum of predictions, some people will be right
and some will be wrong.
The most important thing for us is to get this historic "train"
on the tracks and to depart the station safely. Indeed,
whether the initial trains are sold out with large crowds left
on the platform or the train departs with some empty seats may
not be as important. What matters to us is that this is a
long term scheme and its success will be measured in years, not
days or weeks. The immediate achievement is the
infrastructure itself, which connects such vastly different and
disparate markets and systems.
I've also heard a lot of people speculate over who gains more
from the scheme; some think the Mainland is the major
beneficiary because its market is opening and its currency is
becoming more international. Others say it's a gift to
Hong Kong that will enhance liquidity and bring more investors
to our market. I think both of these perspectives miss
the point – the question we should be asking is, are
we better off with Shanghai-Hong Kong Stock Connect or without
it? The answer is easy. Instead of counting marbles
to see which side has more, we should be confident that we
found a solution that benefits both sides.
The regulators, exchanges, and clearing houses on both sides of
the boundary have worked extremely hard over the last seven
months to iron out as many kinks in the scheme as possible
prior to launch day. Just this week, the HKMA announced
that the RMB20,000 daily exchange limit would be lifted, and
yesterday the capital gains tax issues were settled.
This should give investors some certainty and
Still, there may be hiccups in the early going. Our team
has worked hard and is prepared for a number of situations, but
as with any scheme of this magnitude, there is always the
possibility of something unanticipated cropping up. If
this happens, we will work to fix the issues as best as we
can. Shanghai-Hong Kong Stock Connect will keep evolving
and getting better over time, so we shouldn't be too elated if
everything is great on the first day, or too disappointed if it
doesn't meet our expectations. It is a long road, and we
are just getting started.
I want to sincerely thank everyone in the market for your
support. It hasn't been easy coming this far, but we're
ready to launch. Best of luck to you all. This is a
journey we'll be on together for a long time.