nvestors in Shenzhen and Hong Kong were allowed to buy a defined range of stocks of the other side’s market via local security companies or agents as of December 5, 2016.
Shenzhen is the second mainland stock market to be connected to Hong Kong following the Shanghai Stock Exchange. According to the China Securities Regulatory Commission, the connection aims to attract more foreign investors, enhance the transparency of listed companies, and further promote the healthy development of China’s stock markets.
As the Chinese yuan is under huge depreciation pressure, the connection between the two markets has caused wide concerns, with many analysts predicting that huge amounts of capital will flow to Hong Kong once the connection opens.
The prediction, however, did not come true on the first couple of days, with the trading volume of both markets much lower than that of the first day when the Shanghai and Hong Kong stock markets were connected two years ago.
Analysts said that as Hong Kong stocks remain low and it is hard to say whether and when they will rise, most of the investors prefer sitting on the sidelines.