Shanghai-London stock link plan on track, says LSE official

Nikhil Rathi, chief executive officer of the London Stock Exchange Plc. [Photo provided to China Daiy]

Nikhil Rathi, chief executive of London Stock Exchange Plc, said work on creating a trading link between the bourse and Shanghai is making good progress.

Hosting the LSE Beijing annual conference in Beijing on Tuesday, London is keen to play a complementary role to the Chinese stock market, and that the proposed trading scheme has drawn substantial interest from investors.

The two sides have carried out a feasibility study into setting up the Shanghai-London Stock Connect, and the work is progressing, said Rathi, without disclosing a specific timetable.

He said the exchange is committed to working together with local companies, financial institutions and regulators to build a vibrant international market in London for Chinese equity and debt funding.

He said some technical issues are still being sorted out by regulators, adding that London, as a market with deep liquidity and wide global reach, is keen to be complementary to the Chinese market.

Recent media reports cited a senior executive at the LSE as saying the trading scheme will not simply mimic the Shanghai-Hong Kong Stock Connect model, due to the more complicated issues including time difference.

Rathi said London will take advantage of Beijing's effort to lift the global profile of the yuan and seek to develop more yuan-denominated products to meet what he said was a "strong appetite" by global investors who are holding offshore yuan and looking for suitable assets to invest.

There are 49 Chinese firms listed in London. Thirty-nine yuan-denominated bonds have been sold on the British bourse, raising 2.2 billion pounds ($3.3 billion), as well as seven yuan-denominated exchange-traded funds.

Tang Xiaodong, chief executive of China Asset Management Co Ltd, said the proposed trading link could meet the rising demand of Chinese investors to diversify their portfolios with greater exposure to overseas assets.

If the link is introduced, Tang said Chinese mutual funds would be unlikely to engage in direct investment, preferring instead to partner with foreign funds that could act as "sub-advisers".