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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Hong Kong and Shenzhen trading link off to negative start in China

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HONG KONG: A long-delayed trading link between the exchanges of Hong Kong and Shenzhen in China made a disappointing debut on Monday, with markets on both sides of the border ending lower.


The link opens another door to the mainland’s cloistered markets, allowing foreigners to buy shares in more than 800 Chinese firms for the first time, while also giving mainlanders further access to Hong Kong-listed companies.


Similar to a connect that kicked off between Hong Kong and Shanghai two years ago, the scheme is being touted as China’s latest effort to prove its capital markets are gradually opening.


But a growth slowdown in China’s economy, the weak yuan and an expected hike in US interest rates have analysts sounding a note of caution.


Hong Kong’s city leader Leung Chun-ying hailed it as “yet another milestone in deepening mutual access” between the capital markets in Hong Kong and mainland China.


The former British colony is now a special administrative region of China but remains connected to the global financial system, unlike the mainland’s closed markets.


However, by the close Hong Kong was down 0.26 per cent and Shenzhen’s composite index had given up 0.78 per cent.


And only 21 per cent of the northbound trade permitted under the scheme was taken up, while a little more than eight per cent of the southbound quota was used up.


Hong Kong-based analyst Jackson Wong said the lacklustre start was not a surprise. “Investors were not expecting a spectacular open anyway, because investor sentiment is a little bit on the quiet side,” he said.— AFP


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