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China, Hong Kong to expand cross-border Stock Connect scheme

Wider range of shares will be available, with change expected in about 3 months

The changes to the Stock Connect system will let offshore investors buy China-listed shares that have a market capitalization of 5 billion yuan and meet certain liquidity criteria.   © Reuters

SHANGHAI (Reuters) -- Chinese and Hong Kong securities regulators said on Monday that they have agreed in principle to further expand the scope of eligible stocks under the mainland-Hong Kong Stock Connect.

The move is aimed at "deepening mutual stock market access between the mainland and Hong Kong, and [promoting] the development of both capital markets," the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) said in the joint statement.

The scope of eligible stocks will be expanded for both the Northbound and Southbound trading links, and preparation for the expansion will take about three months, the regulators said.

Specifically, Northbound trading, which allows offshore investors to buy China-listed shares, will include stocks with a market capitalization of 5 billion yuan ($717 million) or above and meet certain liquidity criteria.

The scheme will also include stocks of companies that have issued both A shares and Hong Kong-traded H shares, according to the statement.

In Southbound trading, which allows mainland investors to buy Hong Kong stocks, the scope will be expanded to include stocks of foreign companies with primary listings in Hong Kong that are constituents of Hang Seng Composite Indices.

The proposal will be launched only after the preparation for relevant trading and clearing rules and systems has been completed and all regulatory approvals have been granted, according to the statement.

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