(Shanghai Daily)
Updated: 2007-07-20 08:57

Shanghai and Hong Kong should seek more cooperation in capital markets to build up the two cities' international financial-hub status, a senior Hong Kong financial regulator said yesterday.

"More trials on the stock markets are expected to be made to strengthen the link between the two sides," said Julia Leung, executive director (external) of the Hong Kong Monetary Authority at a financial forum held in Shanghai.

The expansion of the qualified domestic institutional investors(QDII) and qualified foreign institutional investors(QFII) schemes will become one of the channels to spur a closer relationship, she said.

Allowing individual investors to put money into Hong Kong's stock market through banks' QDII programs will help mainland retail investors enjoy the growth in Hong Kong and help trim the mainland's excess liquidity, according to Leung,

Letting stock-portfolio products based on Hong Kong equities be traded on the Shanghai Stock Exchange can be another aspect in the trial, she said, without elaborating.

As capital can't flow freely between the Hong Kong and Shanghai bourses, companies with dual listings have recently seen their stock prices differ greatly in the two markets due to a sizzling rally on the mainland side.

At present 35 companies are listed both in Shanghai and Hong Kong, among which 14 counters have yuan-backed A shares trading at least at a 50-percent premium to their Hong Kong-traded H shares.

Chinese mainland authorities have allowed banks, funds and brokerages to pool investors' funds to invest in Hong Kong shares this year via the so-called QDII scheme.