BlackRock to start using Shanghai-Hong Kong Exchange link

[HONG KONG] BlackRock Inc, the world's largest money manager, plans to start using the Shanghai-Hong Kong exchange link, endorsing a program that has so far been slow to lure international investors.

The firm's Hong Kong-domiciled China A-Shares Fund plans to invest part of an initial US$60 million via the connect after a round of successful tests, said Marc Desmidt, BlackRock's head of strategic product management for Asia Pacific. The money manager already has about US$1.5 billion of quota to buy mainland shares through separate programs for qualified foreign institutions.

"We have a long history of over ten years investing in China's onshore markets and look forward to developing our offering through the new opening," Desmidt said.

Foreign investors have left about 45 per cent of their quota through the connect unused since it began in November, a period when the Shanghai Composite Index more than doubled. The gauge has since dropped more than 20 per cent from its peak, bringing an end to its longest-ever bull market.

BlackRock's decision to use the link isn't related to the latest market drop, Mr Desmidt said. The company, which received permission from a Luxembourg market regulator for 15 global funds to trade through the connect, hasn't yet used money from individual investors via the link.

The Shanghai Composite Index dropped 3.3 per cent to 4,053.03 at the close, after swinging between a loss of 7.6 per cent and a gain of 2.5 per cent in Monday trading, recording the biggest intraday point move since 1992.

BLOOMBERG