Huatai Securities, HSBC Holdings to set the tone for launch of platform in December
Huatai Securities and HSBC Holdings are expected to be the only two stocks to list and trade at the launch of the Shanghai-London Stock Connect in December, and investors may have to wait for months to invest in other stocks planning to do the same, according to two people with knowledge of the matter.
Many companies have expressed their interest in participating in the long-anticipated stock connect program, but "these two might be the only two stocks ready to list and trade right at the scheduled time of the link to kick off. Companies have been pressed for time", said the people who declined to be identified because they lack authority to speak to the media.
More companies are expected to join the scheme after the whole system becomes more mature, but investors may need to wait for months as the listing process takes time, according to the people.
Security regulators may probably announce stocks that are available to list and trade during the first week of December, according to an earlier report in the Securities Times.
The two companies have made separate announcements on plans to join the stock connect scheme that allows eligible companies listed in the two nations to issue depositary receipts (DRs), and list and trade them on the other side's market.
Huatai Securities, China's third-largest brokerage by market value, said the company intends to issue 82.5 million global depositary receipts in London, and each one represents 10 of the company's A-shares. The company expects to raise at least $500 million in funds, according to a statement issued by the company last week.
London-based HSBC Holdings said the company has been studying the proposed framework for the listing of Chinese depositary receipts, but has yet to reveal further details.
The stock connect program, which has been in the pipeline since 2015, is part of China's effort to promote the opening up of its financial market.
Analysts said the trade connect scheme is expected to provide companies with more opportunities in overseas markets.
After issuing the first global depositary receipts, it may take around two to three years to see them as a popular funding method for listed Chinese companies in the A-share market, Li Shaojun, an analyst with Guotai Junan Securities, wrote in a research note.