New link to Shenzhen is almost ready

A man walks past the Shenzhen Stock Exchange in Shenzhen, Guangdong province, Oct 6, 2016. [Photo/IC]

Combination with HK and Shanghai to create integrated market joining up investors

Connectivity testing and market rehearsals to verify the technical readiness for the soon-to-be-launched stock trading link between Shenzhen and Hong Kong were completed over the weekend, marking almost the final step in a prolonged process expected to pave the way for the second cross-border stock "through train".

The official rollout is projected to come in mid-November, nearly two years after the milestone launch of a link with Shanghai. Hong Kong Exchanges and Clearing (HKEx) chief executive officer Charles Li Xiaojia said previously that it will take roughly two weeks to formally kick off the stock connect after the completion of final testing and preparatory work.

Some 144 Hong Kong-based brokerage firms reportedly joined the northbound trading market rehearsal, 11 more than the current participants in the Shanghai-Hong Kong Stock Connect, while 97 mainland brokers participated in the southbound trading rehearsal.

For the very first time, international investors will have an easy access to trading stocks listed in the southern coastal metropolis. The fishing village-turned-megacity stands as the poster child of China's "new economy" and is already home to a wealth of tech enterprises and startups, many more than Shanghai.

The abolishment of the overall quota limits on the Shenzhen-Hong Kong Stock Connect, in particular, comes as the biggest highlight, Chief China Economist of HKEx Ba Shusong told the third Dameisha China Innovation Forum in Shenzhen over the weekend.

"In terms of trading and clearing mechanisms, the upcoming link with Shenzhen is viewed as an extension of the link with Shanghai," said Ba. "But the point is, with the aggregate quota scrapped, stock exchanges in Shanghai, Shenzhen and Hong Kong are linked together into a community, with the combined market capitalization amounting to 70 trillion yuan ($10 trillion), and almost equal to that of the New York Stock Exchange. This tremendously beefs up the investor base."

Hong Kong stocks closed higher on Monday at 22,801.40, up 0.7 percent.