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Regulators to set date for Shanghai-HK stock connect
A scheme to link China's main stock exchange to the Hong Kong bourse is still under preparation and a launch date depends on regulators, Shanghai's mayor said on Sunday.
The "Shanghai-Hong Kong Stock Connect" platform - which would allow international investors to trade selected stocks on Shanghai's tightly-restricted exchange and let mainland investors buy shares in Hong Kong - was widely expected to launch last month.
"The Shanghai stock exchange and Hong Kong stock exchange are now both making preparations," Shanghai Mayor Yang Xiong told a news conference.
"For preparations, the workload is heavy... there can't be any problems because stock trading is a major matter," he said.
He did not give a timetable for a future launch.
"As to when it will connect, that is the decision of regulatory bodies," he said.
Hong Kong stock exchange chief Charles Li has suggested that pro-democracy street protests in the former British colony were partly responsible for the postponement, though industry officials say technical and regulatory issues need to be resolved.
The delay has raised questions over the pace of China's economic reforms.
The Shanghai mayor also pledged on Sunday to speed up development of China's first free trade zone (FTZ), as a chorus of foreign companies expressed disappointment at the speed of promised reforms.
The FTZ was set up in China's commercial hub Shanghai in September last year with the promise of a range of financial reforms, including full convertibility of the yuan currency and free interest rates - pledges which remain unfulfilled.
"The resulting time lag between announced and actually implemented reform measures has created an opaque picture that has led to a wait-and-see attitude among many foreign investors," Michael Diekmann, chairman of German insurance giant Allianz, said in a paper presented at a meeting of foreign business leaders in Shanghai.
Mr Yang said the government would work towards making the yuan - also known as the renminbi (RMB) - freely convertible, among other financial liberalisation plans for the FTZ.
"We will gradually put in place an institutional and regulatory framework to enable the convertibility of the RMB under the capital account... so that the financial sector can better serve the real economy," he told the meeting, which serves as an advisory body to the city government.
China keeps a tight grip on its currency for fear that unpredictable inflows or outflows of funds could damage the economy and reduce its control over it.
"A lot of financial reforms in favour of liberalisation have been announced but have not yet been implemented or not completely, such as the liberalisation of RMB," Gerard Mestrallet, chairman and chief executive officer of French energy firm GDF Suez, said in another paper.
Yang said the government would offer a revised "negative list" of what is barred in the FTZ for 2015, following criticism that the two previous lists were too long.
"Of course, our target is to further shorten the negative list in the 2015 version," he told the news conference.
Some 12,600 companies had registered in the FTZ since its establishment but only 14 percent were foreign-invested firms, according to official figures.