The London-Shanghai Stock Connect service is now open for business as UK builds on its efforts to build a stronger economic dialogue with China. Chancellor Philip Hammond said the initiative represents a "strong vote of confidence" as Britain prepares to leave the European Union on October 31. Hammond, who is hosted Chinese vice premier Hu Chunhua, said, "Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia. London is a global financial centre like no other, and today's launch is a strong vote of confidence in the UK market."
The scheme will allow international investors to access China A-shares from outside Greater China. At the same time, over 260 Shanghai-listed companies will be eligible to list in London through the initiative. It is intended that investors will be able to trade across London and Chinese time zones, allowing issuers from both markets to raise capital in the other market.
The Shanghai Stock Exchange said the new connect would give domestic firms support in expanding their global businesses. Chinese brokerage Huatai was the first company to make its full London debut. Hammond has sought to build economic ties with Beijing as Britain prepares for Brexit, despite controversies over issues like the potential involvement of Chinese tech giant Huawei, in the UK's 5G network.
He had attended a conference in the Chinese capital in April to promote Beijing's multi-billion dollar Belt and Road infrastructure programme to develop new land and sea routes with the West. He has said the aim as to win lucrative financial, legal, and design services contracts for UK firms. The move will be a welcome patch of positively for China, with the nation currently locked in a bitter trade war with the United States.
After a joint economic summit between Britain and China in London, the chancellor said he welcomed the closer cooperation. He also said Britain is "aware of the risks" facing sensitive sectors of the UK economy, such as energy infrastructure and telecoms, from overseas investments. He added that the UK has controls in place to protect national security but will strengthen them further.
“The UK is an open trading economy that depends on inward investment and it’s vital that we forge a relationship with China that works both for trade and for investment to our mutual benefit. But of course we’re aware of the risks,” he said.
