Chief Executive Leung Chun-ying said the Shanghai-Hong Kong Stock Connect scheme launched Monday will help bolster the financial industry in Hong Kong and and make it an important portal for foreign funds seeking investment opportunities in the mainland.
Investors should understand that money invested in mainland shares through Hong Kong includes funds from around the world, Leung said in a blog post quoted by state news agency Xinhua Wednesday.
He said some people may be interested only in arbitrage opportunities but the real value of the cross-border stock trading program lies in the relative flow of capital and its potential to reinforce Hong Kong’s status as an information and knowledge hub specializing in the Chinese investment market.
The scheme offers global investors the ability to conveniently trade Shanghai A shares on the Hong Kong stock market, giving them access to China’s economy.
Leung highlighted Hong Kong’s strengths as a global center of information and financial services.
That means Stock Connect can help create employment and development opportunities for Hong Kong, Leung said.
Hong Kong financial professionals can help foreign investors tap into Shanghai-listed enterprises through their A shares traded in Hong Kong.
And when the market starts to grow, young people in Hong Kong will have a greater chance to get a bigger and better slice of the pie, he said.
Tam Chi-keung, an academic and news commentator, said he expects investment flows from Hong Kong to the mainland to be more than the reverse as demand for cash in the former outstrips that in the latter.
Insufficient domestic investment, slower growth and real estate bubbles from aggressive stimulus spending worth 90 trillion yuan (US$14.7 trillion) after the 2008 financial crisis, have made China dependent on foreign capital.
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