China's Shenzhen-Hong Kong Stock Connect link set for November launch
Updated : 11:50
China’s State Council has approved the launch of the long-awaited 'Stock Connect' trading link between Shenzhen and Hong Kong stock markets, nearly two years after a similar link with Shanghai.
With the initial infrastructure having now in place, Beijing said Shenzen-Hong Kong Stock Connect is set to open on an unspecified date before the end of 2016, .
"The basic preparation work for the stock connect scheme between Hong Kong and Shenzhen is ready," Chinese Premier Li Keqiang said in a statement posted on the central government's website.
"The State Council has already approved the necessary documentation, of the plan to introduce the Shenzhen–Hong Kong Stock Connect."
Final tests in preparation for the launch are expected to take around three more months, the Financial Times said, which would allow the link to open as soon as November.
Based on the successful pilot of the Shanghai Stock Connect, the new trading link indicates that China is taking a firm step toward being "more market-oriented and international", Li said, adding that the link will help cement Hong Kong’s role as a global financial center and promote cooperation with mainland China.
Li said carrying out reforms and opening up the mainland capital markets to the outside world forms the major part of the country’s economic blueprint in future.
Shenzen's is the eighth largest stock exchange in the world and fourth largest in Asia, based on the $2.3trn market capitalisation of its constituent companies.
In May, Shenzhen’s Small and Medium Enterprise Board overtook Shanghai for the first time in at least a decade at the top of turnover rankings for the nation’s four major trading venues.
China economist Chen Long at Gavekal Dragonomics told the Financial Times that, based on his estimates of the limited use of the Shanghai link, he thought appetite for Shenzen shares will only be "gradual" but would be better than it has been for Shanghai due to the better historical returns from Shenzhen’s small caps stocks.