23 February 2019

Short sellers banned from Shanghai-HK share through train

Short selling will be banned under a new direct share trading program between the Shanghai and Hong Kong stock exchanges, Ming Pao Daily reported Tuesday, citing Hong Kong Secretary for Financial Services and the Treasury Chan Ka-keung.

In an initiative to open up its capital market further to offshore investors, the State Council announced last Thursday that it had approved a mutual market access mechanism between the Shanghai and Hong Kong bourses, paving the way for greater cross-border investment and money flows.

To limit market risks, regulators will set investment quotas and other curbs on investors. The total cross-border trade quota will be capped at 250 billion yuan (US$40.48 billion) for Hong Kong-listed stocks and 300 billion yuan for Shanghai shares. It will take six months to put the plan in place.

Short selling involves borrowing securities from brokers to sell on the market. But this will add to management difficulties and not be allowed in the initial stage of the program, the report said.

Chan also said he approached central bank governor Zhou Xiaochuan {周小川} at the Boao forum in Hainan about further easing of the renminbi exchange quota for Hong Kong residents, which is now set at 20,000 yuan per person per day.

– Contact HKEJ at [email protected]



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