Hong Kong (AsiaNews) - The announcement of the merger of the Shanghai and Hong Kong stock exchanges has boosted Chinese markets, which yesterday posted one of their best performances in recent years. The mainland market closed the session up 2.3%. The composite index gained 55.50 points to close at 2473.67 points, the highest level since November 2011, with a turnover of 245.2 billion yuan (just over EUR 32 billion). Hong Kong also closed positively, with an increase of 0.83%, the Hang Seng index gained 194.46 points to close at 23744.70 points, with a turnover of 91.98 billion Hong Kong dollars (EUR 9.52 billion).
The euphoria of investors is linked to the official announcement of the launch of a common trading platform. The initiative is considered one of the most important financial and economic moves since the last century, and will be able to offer foreign investors unprecedented access to China's financial market. The project, called the Shanghai-Hong Kong Stock Connect, has received all necessary approvals and will officially start operations on November 17th.
The Beijing government presented this project in April 2014, and sought to use it as a weapon to stop the democratic demonstrations taking place in Hong Kong. The merger has been postponed twice, and the government of mainland China even aired the possibility of "canceling the project due to political instability" in the former British colony. Despite the fact that the protests for a real universal suffrage are still in progress, the merger has eventually been given the go ahead.
Charles Li Xiaojia, chief executive of the Hong Kong Stock Exchange, said: "The launch of the Shanghai-Hong Kong Stock Connect represents a significant step in the opening of China's capital markets for both domestic and for international investors, as well as a milestone in the internationalization of the yuan". China's national currency was until now limited to trade on the National stock exchanges: union with the largest financial hubs in the world will make it possible to look beyond their borders and invest in foreign markets.
Hong Kong has long been the second most important exchange in Asia after that of Tokyo; on the other hand, in recent years, Shanghai has managed to carve out an increasingly important role thanks to the futures market. According to current data, their twinning will create a turnover capable of bypassing the Japanese stock exchange in terms of market capitalization. Tokyo is third in the world and first in Asia to 4.54317 trillion dollars.
Data is provided by the World Federation of Exchanges,
which annually calculates the volume of global transactions. In 2013, based on market
capitalization, the Federation placed the Hong Kong Stock Exchange (SEHK) in
sixth place with 3.10078 trillion dollars. Shanghai, not yet open to foreign
investors, is worth 2296.99. The data indicates that from Monday 17 there will
be cross-border transactions for an amount up to US$ 3.8 billion every day.
Should the project be successful the plan provides for further enlargement to include, at a later date, even the Shenzhen Stock Exchange. This was revealed by a Chinese government official, who called it a target "to achieve by 2015". The three cities combined could reach a market capitalization of about 7 trillion dollars.