The TRADE Asia - Spring 2017

already and link already and a Chi-na-UK Stock Connect is unlikely to bring any material incremental inflow to China.

“China is busy with other priorities to help slow down capital outflow due to appreciation of USD and the USD interest rate hike,” she says.

Despite indicating potential pitfalls of a direct stock connect, Chen suggests that both UK and Chinese governments would be willing to arrange an alternative mutual solution.

“I believe both markets are keen to look at alternative arrangements that would deliver commercial benefits without the need for an extensive level of regulatory changes in both market to support such arrangement,” she says.

Technical and regulatory di;cul-ties have also been cited as potential reasons why a UK-China trading link could not be established.

Replicating the Hong Kong-Shanghai link for cash equity markets is complex due to time zone di;erenc-es and the extensive level of regulatory cooperation needed to change the rules in both China and the UK to accommodate the link would take an extensive amount of time and resources to achieve.

Cindy Chen, head of securities services at Citi, explains the potential link for cash equity between China and the UK also provides no commercial benefit.

“Global investors could access
China via Hong Kong-Shanghai
Former UK Chancellor, George
Osborne, proposed a potential
link between the UK and Chi-
na in September 2015 during a
visit to Shanghai, as he revealed a
“landmark feasibility study” had
taken place to assess the project’s
viability.

The touted benefits were set to include increased job and investment opportunities for both countries, although experts have said the project has since hit several issues.

Margaret Harwood Jones, managing director and global head of securities services at Standard Chartered, says a potential link between London and Shanghai stock exchanges is being worked on, “but has run into delays due to the set up between the di;erent parties as