European stock markets plan Shanghai links
Closer links between the Shanghai Stock Exchange and UK and European exchanges may be on the cards. The London and Shanghai exchanges are exploring a scheme to link their markets. At the same time, European exchange group Euronext announced a deal with the Shanghai Stock Exchange to promote its listed members to Chinese investors.
The discussions between the UK and Chinese markets were during a visit of UK chancellor George Osborne to Beijing, as part of the annual UK-China Economic and Financial Dialogue. Xavier Rolet, chief executive of the LSE was part of Osborne’s delegation.
The LSE declined to comment further, although it did say that the deal was part of its ongoing “commitment to China”.If the plans go ahead, it would likely mean that investors on each market would be able to trade shares on the other using their local brokers and clearing houses. A similar scheme already exists between the Hong Kong Stock Exchange and Shanghai. That initiative, launched in November last year, was part of an ongoing drive within China to gradually open up the mainland Chinese market to international investors.
The UK government has long sought to promote links between UK and China, encouraging the growth of London as an offshore renminbi hub. In January 2014, the London Stock Exchange launched the first Chinese renminbi ETF listed in London, as part of an effort to open the Chinese A shares market up to investors. In July, the LSE signed its first Hong Kong member, BOCI Securities, which joined following a deal that allowed Hong Kong firms to become members. Meanwhile this month, the LSE signed up China Construction Bank as a member firm. The bank, the second largest bank in China, joins London Stock Exchange just a year after the two organisations signed an MoU to work together to expand each company’s access to UK, European and Chinese markets as well as promoting the development of the offshore RMB market in the UK.
In a separate development, European exchange group Euronext, which consists of stock markets in France, the Netherlands, Belgium and Portugal, has done its own deal with the Shanghai Stock Exchange. Under that deal, Shanghai will promote and market Euronext’s cash, derivatives, commodities and index data in China. SSE Infonet, a subsidiary of the SSE, will act as Euronext’s market data agent in China. Euronext says the deal is about gaining visibility for its listed companies and helping Chinese investors reach the UK market.
“By acting as domestic sales and marketing agent of Euronext market data, we believe this strategic co-operation can enrich product line for local information vendors and strengthen local investors’ knowledge to manage their investment portfolio,” said Bo Que, vice president of the Shanghai Stock Exchange. “It is also a further step for SSE towards internationalisation.”