UK-Listed Firms Can Sell Shares In China For The First Time

Philip Hammond attends the launch of the London-Shanghai Stock Connect service

UK-listed companies can sell shares in China for the first time from today as the London-Shanghai Stock Connect service opens for business.

The initiative forms part of the countries’ efforts to build greater economic ties as China looks to open markets despite the trade war with the US and the UK prepares for life after Brexit.

It gives international investors the opportunity to invest in over 260 of 1,500 Shanghai-listed companies – those seen as eligible to participate – for the first time as they are able to secure a stock market listing in London.

UK firms can do the same in China – bolstering access to shares in each country and allowing firms to raise capital.

An investor walks past stock prices monitors at a securities company in Shanghai on September 25, 2018
The Shanghai Composite index is over 15% higher in the year to date while the FTSE 100 is 9% up in comparison

Chinese brokerage Huatai was the first company to make its full London debut on Monday, with investors in the CIty getting the opportunity to trade global depository receipts in the company.

These are certificates that represent an ownership of ordinary shares.

Closer financial services ties with Beijing take place at a time when global trade growth is slowing and governments are cautious about Chinese state interference in corporate entities.

The UK is still considering the potential involvement of Chinese tech giant Huawei in the country’s 5G network as the US and many other major powers block the company’s technology on spying fears.

The launch of Stock Connect was marked during a visit to London by Chinese vice premier Hu Chunhua for talks with Chancellor Philip Hammond.

The event also saw the announcement of wider market access for British beef and pork in China, as well as a £1bn fund to help UK firms expand into Chinese markets.

Shanghai skyline
Shanghai is China’s main financial centre

Mr Hammond said at the London Stock Exchange launch: “London is a global financial centre 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.”

He attended a conference in the Chinese capital in April to promote Beijing’s multibillion-dollar Belt and Road Infrastructure structure programme to develop new land and sea routes with the West.

Mr Hammond said then his aim was to help win lucrative financial, legal and design services contracts for UK firms.


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