Shanghai Finance

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China and UK set to link closer in capital markets

June 15,2016

   
   

China and UK are looking to boost the connectivity between the two countries’ capital markets, including the launch of a stock connect and a program of mutual fund recognition, financial officials of the both sides told the ongoing Lujiazui Forum today.

In his speech at the forum, Lord ASHTON of Hyde, special representative of British Chancellor of the Exchequer, said in addition to a proposed stock trading link between the London and Shanghai exchanges, Britain hope a program to allow British and Chinese fund houses to sell products in each other’s markets will be realized.

Similar to the Mainland-Hong Kong Mutual Recognition of Funds program already operating, a mutual fund recognition agreement between China and UK is expected to allow asset-management companies in China to sell funds in Britain while offering their British counterparts access to the Chinese market.

The program, if realizes, will further boost cross-border investment between the two countries. Last year, China and Britain agreed to carry out a feasibility study for a stock trading link between bourses in London and Shanghai, but did not provide further details.

“China’ stock market is dominated by retail investors, while in London more than 90 percent of investments come from institutional investors. The Shanghai-London connect will work to increase the rate of institutionalization of Chinese market,” Xavier Rolet, chief executive officer of London Stock Exchange Group, said at the forum.

Britain is the guest country of honor at the Lujiazui Forum 2016. China and Britain have been cooperating on a wide range of aspects in the financial area, including issuance of offshore yuan-denominated bonds, green financing and infrastructure building.

Financial officials of the both sides today also pledged to step up cooperation in terms of financial market regulation and work together to contribute to the revival of global economy.

“As China continues to open up, we should learn from British financial regulators about how to improve supervision and manage risks in a liberal market,” said Qi Bin, director-general of the Department of International Affairs of China Securities Regulatory Commission.