Ground-breaking London Stock Exchange link with China bourse goes live

Mark Johnson's picture
by Mark Johnson

A ground-breaking tie up between the London and Shanghai stock exchanges goes live today, opening up new opportunities for company listed on both.

UK listed companies will be able to sell shares in China from today, with the launch of the London-Shanghai Stock Connect. 

This is the first time that any foreign company will be able to list in mainland China.

Investors will be able to trade across London and Chinese time zones, allowing issuers from both markets to raise capital in the other market. 

It will mean UK listed companies can be traded by more investors, providing investors with greater choice.

There are almost 1,500 companies listed in Shanghai, over 260 of which are potentially eligible to take part in Stock Connect and list in London. 

Trillion dollar market 

It is also estimated that China will reach over $17 trillion in assets under management (AUM) by 2030, having had $2.8 trillion AUM in 2016.

The launch of Stock Connect is the centrepiece of today’s UK-China Economic and Financial Dialogue (EFD) which sees the Chancellor host Vice Premier Hu Chunhua and a Chinese delegation in London to discuss multilateral and bilateral economic issues, financial services cooperation, and trade and investment, the UK Treasury said.

Chancellor to launch link

Philip Hammond, the UK's Chancellor of the Exchequer  will launch Stock Connect’s first day of trading at the London Stock Exchange today.

“London is a global financial centre like no other, and today’s launch is a strong vote of confidence in the UK market", the Chancellor is expected to say.

“Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia."

The culmination of four years’ work, Stock Connect will mean, for the first time, that international investors will be able to access China A-shares from outside of Greater China, and through international trading and settlement practices. 

Stock Connect will not require any direct trading infrastructure links. Instead, it will allow companies to dual-list on both the Shanghai and London Stock Exchanges using Depositary Receipts (DRs).

From today, London investors will have the opportunity to trade Global Depositary Receipts (GDRs) for Huatai, the technology-enabled securities group in China.

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