Hong Kong’s vitality tested by stock link

Source:Global Times Published: 2014-11-18 0:28:01

Stock exchanges kicked off trading Monday on the Shanghai-Hong Kong Stock Connect scheme, a link that allows investors to buy and sell shares through each other's exchanges and gives foreign investors wider access to the Chinese mainland's capital markets through Hong Kong. This is a landmark move in China's opening up and one that will really benefit Hong Kong.

Investors will be permitted to buy and sell up to 23.5 billion yuan ($3.8 billion) of stocks each day. A total of 13 billion yuan of the daily quota is northbound investment from Hong Kong and overseas investors, and the remainder is southbound investment, reserved for mainland traders. 

The first day's trading was somewhat surprising, with the northbound quota being fully used, while southbound mainland investors only bought 1.8 billion yuan worth of shares on the Hong Kong market.

Analysts pointed out that the link will increase trade in Hong Kong's stock market and boost competitiveness, but the result of the first day's trading may give cause for alarm in Hong Kong. It shows that despite the favorable policies pushed forward by the mainland, it is Hong Kong society that decides how much it wishes to benefit. 

The unequal first day's trading has been attributed to the shadow cast by the Occupy Central movement. Mainland society has lowered its confidence in Hong Kong and many investors are uncertain whether it will soon resume the rule of law or whether the politics of the street will be a regular occurrence.

Mainland society feels that some Hong Kong residents don't value the country's policies that aim to benefit Hong Kong. Therefore, mainland investors are not sure where the future of Hong Kong's economy lies.

Hong Kong is closely linked with the mainland and is independent economically. It is positioned between the mainland and the outside world, which offers it favorable conditions to take advantage of the mainland's development compared with other economies in Asia and the West. Hong Kong should abstain from complaining about these advantages, which are desired by its competitors.

It is expected that in the future, capital flows from Hong Kong and Shanghai will balance, despite minor differences. It is up to the Hong Kong side to reach this state. It is hoped that Hong Kong will extricate itself from the chaos brought by Occupy Central and become restored to its previous condition.

Competition coming from inland cities has kept Hong Kong worried. However, it is inevitable that the city known as the Pearl of the Orient will face more challenges. The city should be equipped with sufficient capability to cope with new challenges. No city can shield itself from competition and inland cities are confronting more pressure than Hong Kong.

Hong Kong must have a strong sense of crisis, which should bring courage and passion, not whining and frustration. The central government has been generous in providing policies favorable to Hong Kong. The city must respond, and prove its uniqueness through constant innovation.

Posted in: Editorial

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