China Opens Up Exchange to Foreign Investors: One from Column A, Please..(“A Shares”)

Brokerdealer.com blog update profiles latest news from China, where foreign investors will soon be able to trade shares listed on the mainland’s main stock exchange, the Shanghai Stock Exchange.

The Shanghai Hong Kong Connect, a program set to kick off in mid-October, will allow foreign investors to buy some 568 stocks in the Shanghai Stock Exchange through Hong Kong brokerage accounts, subject to an annual total quota of $48 billion.

The Brokerdealer.com database includes a comprehensive directory of Hong Kong and Taiwan brokerdealers that are qualified to help guide foreign investors to this market.

Shenzhen Stock Exchange is expected to launch a similar program next year. As China’s domestic markets become more open, they could be included in major stock indexes, which would lead to billions of dollars in new cash from funds that track these benchmarks, according to UBS AG.

This isn’t the first time overseas investors are able to buy Chinese stocks. Many of the country’s major companies are listed in Hong Kong, where they trade as so-called H-shares. Investors could invest in A-shares, which trade on China’s domestic markets, by buying funds that had access to the market under a program that accounted for less than 2% of the Shanghai market’s free float.

The new program will let investors buy A-shares directly, giving them more flexibility in that market as well as access to many sectors and stocks—such as Chinese liquor manufacturers and makers of traditional medicine—that don’t trade in Hong Kong.

For the full story from the WSJ, please click here.