London opens stock market for a tickling from Chinese tentacles

Don't tell Trump, OK? And it's not for Joe Bloggs, it's for the hedge funds

Companies listed on the UK stock market will effectively be able to offer shares to Chinese investors from today.

The London-Shanghai Stock Connect will mean 260 eligible listed Chinese firms can offer shares in the UK, and UK-listed companies can sell their shares in Shanghai.

The link is designed to allow companies to offer their shares simultaneously in China and the UK by the issuing of global depositary receipts to allow cross-border trading. The system aims to reduce risks caused by fluctuating currencies, time differences or regulatory anomalies encountered by investing directly on another country's stock market.

The announcement is the centrepiece of the "Economic and Financial Dialogue" meeting between UK Chancellor Philip Hammond and Chinese vice premier Hu Chunhua discussing a variety of financial services issues.

The first global depositary receipts available to buy are from Huatai Securities – no, that's Hua-tai – a Chinese investment and broking firm which counts Alibaba among its major investors.

The link-up was originally due to start in December but was delayed due to concerns over how China would relax foreign currency conversion rules.

The Treasury said the deal is a vote of confidence in the strength of the UK market, adding: "Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia."

The exchange is expected to be used by hedge funds and institutional investors rather than individual punters.

The full Treasury statement can be found here. ®

Biting the hand that feeds IT © 1998–2020