Shenzhen-Hong Kong stock tie up approved by government

China has approved a long-anticipated trading link between Hong Kong and Shenzhen's stock markets and abolished an overall quota limit that investors considered restrictive.

The Shenzhen Connect was supposed to be launched more than a year ago but was postponed due to market volatility. It is now expected to go live by the end of the year.

The move comes as China looks to open up its $6.5 trillion (£5 trillion) equity markets to foreign investors. Beijing has also been pushing to have its bourses included in global index providers MSCI but their bid was last rejected in June.


Chinese Premier Li Keqiang was quoted as saying the scheme "marks another steady step towards building a law-regulated capital market with international features".

The overall quota limits for the link between Hong Kong and Shanghai's stock exchange, which was launched in late 2014, was also lifted. Daily quota limits, however, remain in place.

The approval of the Shenzhen Stock Connect scheme may boost market sentiment, Julian Evans-Pritchard, China economist at Capital Economics said.

"It is a welcome signal that policymakers are keen to press on with financial reform as concerns over market volatility and capital outflows fade," he wrote in a report.

"But limited appetite overseas for mainland equities means the direct impact on equity valuations and capital flows will be small."