China suspends link between Shanghai, London exchanges

China has temporarily halted a tie-up between the Shanghai and London stock exchanges, according to people familiar with the decision.
The move to suspend the London-Shanghai Stock Connect program was prompted by political considerations and no time line has been given for when the scheme will resume, the people said, asking not to be identified as the discussions are private. The China Securities Regulatory Commission and the Shanghai Stock Exchange did not immediately respond to Bloomberg requests for comment. The suspension was previously reported by Reuters.
The London-Shanghai link was designed to allow companies listed on one venue to issue shares on the other. While an agreement for some sort of connection has been in the works since at least September 2015, the London end of the link only started in June last year — and only a few companies have expressed interest. Time zones and rule differences made it difficult to attempt a trading link similar to those that mainland exchanges have with Hong Kong.
Britain’s stance on the Hong Kong protests is one of the issues that prompted the suspension and a final decision would depend on how relations with the U.K. proceed, said one of the people.
“I’m not aware of the specifics and would refer you to the competent authority and relevant businesses,” China foreign ministry spokesman Geng Shuang told reporters in Beijing yesterday. “I would just like to stress that we hope the U.K. will provide a fair and just and open non-discriminatory environment for Chinese businesses to invest there, and we hope it will create fair conditions for practical cooperation between the two countries.”
Brokerage Huatai Securities Co. was the first Chinese company to sell global depositary receipts in London last June. SDIC Power Holdings Co. in December postponed its plan to sell GDRs because of “market conditions.”
“It sounds like a low-cost way for the Chinese government to make a statement of its stance on the Hong Kong issue,” said Hao Hong, a strategist with Bocom International. “It’s a symbolic move and I don’t expect it to have any impact on markets.”
A Beijing representative for the London Stock Exchange directed queries to the U.K. office when contacted by Bloomberg. A spokeswoman for the U.K.’s finance ministry declined to comment to Reuters. Bloomberg

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