Hong Kong Exchanges and Clearing Ltd Chairman Chow Chung-kong (L) and Hong Kong Chief Executive Leung Chun-ying pose before hitting a gong during the launch ceremony of the Shanghai-Hong Kong Stock Connect in Hong Kong Nov 17, 2014. [Photo / Agencies]

SHANGHAI - A landmark stock trading link program allowing Hong Kong and Shanghai investors to buy and sell shares on each other's bourse is officially launched on Monday, marking the start of one of China's most significant moves to further open its capital markets.

Chinese shares opened higher on Monday as the Shanghai-Hong Kong stock connect pilot program debuted.

The benchmark Shanghai Composite Index (CSI) opened at 2,506.86 points, up 28.04 points, or 1.13 percent.

Since the program was officially approved in April, it took more than seven months for it to be launched. The SCI has also risen over 18 percent since April.

The Shenzhen Component Index on Monday opened at 8,358.13, up 31.23 points, or 0.38 percent.

According to information by Hong Kong Exchange, the net buy of Northbound stocks reached 8.15 billion yuan ($1.33 billion) by 10 am, accounting for 63 percent of daily quota amount. The remaining daily quota amount of Northbound stocks was 4,823 million yuan, 37 percent of the total.

Trading under stock connect will, initially, be subject to quota restrictions. Overseas investors can only invest a net value of as much as 300 billion yuan ($48.9 billion) in A shares with a daily cap of 13 billion yuan, while mainland investors can only invest a net value of as much as 250 billion yuan in Hong Kong stocks with a daily cap of 10.5 billion yuan. Both quotas apply on a "net buy" basis, which means investors will always be allowed to sell their cross-boundary securities regardless of the quota balance.

There are 568 eligible stocks for Northbound trading, namely constituent stocks of the Shanghai Stock Exchange 180 Index and SSE 380 Index as well as shares that are dual listed in the two bourses (A+H shares). For Southbound, investors will be able to trade 268 eligible stocks, namely constituent stocks of the Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap Index as well as shares that are dual listed in the two bourses (A+H shares). 

 

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