Test of stock link rests with investors on both sides

HONG KONG and Shanghai are about to link their stock markets. While it has taken years of debate and several false starts, the hook-up could have big implications for investors on both sides of the border. How big depends on China's willingness to relax its strict limits on capital moving in and out.

Why did it take so long?

China and Hong Kong have been talking about cross-border share trading for almost a decade. But previous efforts have foundered on the reluctance of the People's Republic to relax its grip on international capital flows. As a result, foreign investment in Chinese stocks has only been open to a handful of large institutions. The Hong Kong and Shanghai stock exchanges have found a clever way around the problem: investors in each city will be able to buy shares listed on the other market. But when they sell, the cash comes back to their …