Date
17 August 2017
David Cui of Bank of America Merrill Lynch expects Stock Connect to start by the end of this year. Photo: EJ Insight
David Cui of Bank of America Merrill Lynch expects Stock Connect to start by the end of this year. Photo: EJ Insight

Stock Connect may start by end-2014: BofA Merrill Lynch

The Shanghai-Hong Kong Stock Connect is expected to be launched by the end of this year, Bank of America Merrill Lynch said on Monday.

“At this stage we still expect the launch date to be by the end of the year. Technically, everything is ready, it’s just waiting for regulators’ approval,” said David Cui, head of China equity strategy at Bank of America Merrill Lynch Global Research.

Officials, including the chief executive of Hong Kong Stock Exchanges and Clearing (00388.HK) Charles Li Xiaojia, have said the “through-train” program will be launched in October. But the China Securities Regulatory Commission has not yet given the green light, and it is widely speculated that the program is held back because of the ongoing Occupy movement in Hong Kong.

Cui, however, refused to ascribe the delay to the month-long pro-democracy movement.

“The launch date is later than our expectation. Most of us are on the same page that it will be launched in October. There are different reasons for this. But it’s very difficult for me to speculate. Our sense is [for it to start] over the next two months or so,” he said.

“As we do not expect a significant delay in the program, the impact on the market will be limited despite certain market volatility.”

He also said the “through-train” program may not start well enough as market expectations may have gone too high. North-bound capital flow, in particular, may disappoint in the short term.

“The traffic may not be as heavy as expected in the beginning, so the market may have more room for expectation before it is launched … it may not be a good thing after it is launched,” he said.

The best advice is for investors to be patient, bide their time and trade well, Cui said.

In a separate event on Monday, HKEx’s Li declined to comment on whether the delay of the Hong Kong-Shanghai bourse link is caused by the Occupy campaign.

However, he said if the Occupy protests sustain, Hong Kong’s financial sector will be hurt.

Li said students should consider ending the protests gloriously.

– Contact us at [email protected]

JH/JP/CG

EJ Insight reporter

EJI Weekly Newsletter

Please click here to unsubscribe