Shenzhen-HK stock connect to launch soon

The long-awaited Shenzhen-Hong Kong Stock Connect is expected to officially launch in early November, HKEx Chief Executive Charles Li Xiaojia said on Wednesday.

The stock link, approved by the State Council in August, is the second direct equity market trading link between Hong Kong and the mainland after the Shanghai trading link debuted in November 2014.

Li said preparation of the new stock link is drawing to a close and related details will be announced within two days so that brokers can get ready. A comprehensive inspection will be arranged in a few weeks and "a lucky day" will be selected to open the stock connect in early November.

Stimulated by the news, stocks listed on both the Shenzhen and Hong Kong exchanges rose slightly on Wednesday afternoon.

Li noted that the HKEx paid a great deal of attention to protecting minority shareholder interests, especially mainland investors, because they are lacking knowledge of the Hong Kong market and have a different investment concept.

Ran Linghao, QDII portfolio manager at Shenzhen-based Dacheng Fund, said he believes the new stock connect will have a more positive respond from the market than the Shanghai-Hong Kong link because of renminbi's depreciation expectation and signs of capital going to the Hong Kong market.

In addition, another advantage of the new connect is the value of H-share stocks has adjusted a lot after the first stock link, Ran added.

Yang Delong, chief economist of Shenzhen-based Qianhai First Seafront Fund, echoed the value of A-share stocks used to be 50 percent higher than H-shares, but the percentage fell to 20 percent after the first stock link.

The ratio will continue to decline after the second link, he pointed out, but the gap won't be totally removed.