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LONDON, United Kingdom – Britain and China began selling shares in each others’ companies on Monday, June 17, under a landmark deal, Britain’s Treasury announced, as London looks to remain a leading financial center post Brexit.
The launch of the London-Shanghai Stock Connect marks “the first time that any foreign company will be able to list in mainland China,” a statement said, as the UK seeks to extend close trading ties with the Asian powerhouse, despite strains caused by the fallout between Chinese telecoms giant Huawei and the US.
The announcement Monday was the “centerpiece” of the UK-China Economic and Financial Dialogue, the Treasury said.
Britain’s finance minister Philip Hammond was hosting China’s Vice Premier Hu Chunhua and a delegation “to discuss multilateral and bilateral economic issues, financial services cooperation, and trade and investment,” it added.
Hammond said in the statement: “London is a global financial center like no other, and today’s launch is a strong vote of confidence in the UK market.
“Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia.”
The link-up allows investors to trade across London and Chinese time zones and ultimately raise fresh capital, although unlike UK companies, not every Chinese-listed firm is eligible to take part.
“The culmination of 4 years’ work, Stock Connect will mean, for the first time, that international investors will be able to access China A-shares from outside of Greater China, and through international trading and settlement practices,” the UK Treasury explained.
“Stock Connect will not require any direct trading infrastructure links,” it added.
There are almost 1,500 companies listed in Shanghai, including more than 260 potentially eligible to take part in Stock Connect and list in London, the statement added.
Catherine McGuinness, policy chief for the City of London financial district, described the agreement as “good news for the UK, China, and the wider global economy.”
“Innovation is key to London maintaining its position as a leading international financial hub,” she added.
Meanwhile at a press conference later in the day, Hammond said he had discussed with Hu the thorny matter of Huawei.
“We have a very good relationship with the company,” said the chancellor of the exchequer, as Huawei faces pushback in some Western markets after Washington alleged that Beijing could spy on communications and gain access to critical infrastructure if allowed to develop foreign 5G networks.
The company has “been very responsive to any concerns raised by the UK,” Hammond added. (READ: Why is Huawei controversial?) – Rappler.com