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Donald Tsang supports cross-border trading

(chinadaily.com.cn)
Updated: 2007-06-19 14:56

Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region said in a recent interview that he supports exchanges in Shanghai and Hong Kong trading stocks listed on each other's markets. Relevant issues are under negotiation, he said.

Tsang is the highest official who publicly supports the cross-border share trading plan and confirms its on-going negotiation.

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A source close to the securities regulator told the Shanghai-based Oriental Morning Post that at present, regulators are encouraging Hong Kong-listed companies to make public offerings in the mainland market. Other than that, issuing a China Depositary Receipt is thought to be a feasible way to achieve cross-border trading.

Insiders believe that cross-border trading may face problems of settlement or foreign exchange control, and so it will be hard to achieve in the short term.

Professor Hua Sheng, head of Yanjing Overseas Chinese University, said the adoption of cross-border trading might divert arbitrage fund to the relatively cheaper Hong Kong market from the Shanghai and Shenzhen bourses. But in the long run, it could help squeeze bubbles in the mainland market and is conducive to the healthy development of China's A-share market.