Shanghai-HK bourse link-up likely in 6 mths

INVESTORS in Hong Kong and Shanghai could be buying shares in each other's stock exchange - as soon as in six months' time - under a groundbreaking cross-border bourse link-up. But first, they need to brace themselves for greater risks and restrictions than would otherwise apply.

The way the Shanghai-Hong Kong Stock Connect is set up is aimed at preventing risks from spilling into each other's backyard while serving multiple purposes; the payoffs, for example, include accelerating the internationalisation of the Chinese yuan, also known as the renminbi, preserving the competitiveness of Hong Kong and Shanghai and hastening the integration and capital flows between the two exchanges.

More immediately, the arrangement will give investors outside China a direct channel to buy Chinese-listed stocks. Those inside the People's Republic will gain access to an international market such as Hong Kong; this will also have the likely effect of lifting China's domestic stocks from their terminal decline.