The Influence of Shanghai-Hong Kong Stock Connect on the Mainland China and Hong Kong Stock Markets
The Influence of Shanghai-Hong Kong Stock Connect on the Mainland China and Hong Kong Stock Markets

Author: Yang-Chao Wang

Publisher:

Published: 2017

Total Pages: 10

ISBN-13:

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China has been intensively launching opening-up policies since November 2014. Among these policies, the Shanghai-Hong Kong Stock Connect offers international investors an approach to investing directly in Mainland China stock markets. At the same time, Mainland China capital can gain access to overseas markets via Hong Kong. This study investigates the influence of the policy by using the Vector Autoregressive and Generalized Autoregressive Conditional Heteroscedastic framework. The results show that the new policy has different impacts on the Shanghai, Shenzhen, and Hong Kong stock markets due to their distinct market features and policy restrictions. The three markets also transmit the policy effects to one another due to their close linkages. It not only indicates that Mainland China financial centers (Shanghai and Shenzhen) integrate with one of international financial centers (Hong Kong), but also symbolizes the gradually increasing strength of Chinese policy effects on global capital markets.

The Integration of the Chinese Stock Markets Following the Shanghai-Hong Kong Stock Connect
The Integration of the Chinese Stock Markets Following the Shanghai-Hong Kong Stock Connect

Author: Sheung-Chi Chow

Publisher:

Published: 2018

Total Pages: 28

ISBN-13:

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This study examines the impact of the Shanghai-Hong Kong Stock Connect on the degree of financial integration between the Hong Kong stock market and the Shanghai and Shenzhen stock markets in mainland China. By applying cointegration tests and linear and nonlinear Granger causality techniques on market capitalization and market index, we find that the stock markets from mainland China are increasingly influencing the Hong Kong stock market after the introduction of the Stock Connect scheme. Following the scheme's introduction, the cointegration relationship between China and Hong Kong in terms of market capitalizations and market indices is also increasing. Moreover, Granger causality effects on market capitalizations and market indices from China remain strong, while the directional Granger cause of the two variables from Hong Kong to China has become weak or been rejected. Our study indicates that further opening of the Chinese stock markets enhances their leading roles, given that market capitalizations and market indices exhibit the highest degree of explanatory power regarding market correction toward long-run equilibrium. However with nonlinear causality test, our results indicate that Hong Kong stock market is still relevant to understand and predict China stock market after the introduction of the Stock Connect scheme.

The Impact of the Shanghai-Hong Kong Connect on Market Liquidity and Price Divergence
The Impact of the Shanghai-Hong Kong Connect on Market Liquidity and Price Divergence

Author: Michael J. Aitken

Publisher:

Published: 2017

Total Pages: 37

ISBN-13:

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The economic growth of China has seen an increase in its demand for capital, fuelling its local stock markets. This paper examines a market liberalisation event between China and Hong Kong and its impact on market liquidity and price convergence for cross-listed stocks in the two markets. On November 17, 2014, the Shanghai Stock Exchange and the Hong Kong Stock Exchange introduced the Shanghai-Hong Kong Stock Connect (SHHKConnect), a bilateral investment channel between the two markets. The new channel brings with it accesses to new capital for domestic firms and trading expertise from new foreign participants for both regions. The SHHKConnect permits mutual market access for market participants, facilitating trade in each market using existing trading infrastructure. This study adopts a difference-in-difference methodology and finds that market liquidity as proxied by transaction costs, improves in both markets, for eligible stocks that are traded through the bilateral investment channel, three-months post November 17, 2014. Over a longer event horizon of six-months, liquidity in China continues to improve, whereas in Hong Kong it decreases. In addition, reported results identify that the pre-existing price premium between cross-listed China A-shares and Hong Kong H-shares, increases following the market design change. We attribute the increase in price divergence to the incremental improvement in liquidity in China vis-à-vis Hong Kong.

Chinese Companies and the Hong Kong Stock Market
Chinese Companies and the Hong Kong Stock Market

Author: Flora Xiao Huang

Publisher: Routledge

Published: 2013-10-30

Total Pages: 326

ISBN-13: 1134671113

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Listing by companies from one country on the stock market of another country is a device often used both to raise capital in, and to increase bonding with, the target country. This book examines the listing by Chinese companies on the Hong Kong stock market. It discusses the extent of the phenomenon, compares the two different regulatory regimes, and explores the motivations for the cross-listing. It argues that a key factor, in addition to raising capital and bonding with the Hong Kong market, is Chinese companies’ desire to encourage legal and regulatory reforms along Hong Kong lines in mainland China, in order to develop and open up China’s domestic capital markets.

Chinese and Global Financial Integration through Stock Connect
Chinese and Global Financial Integration through Stock Connect

Author: Flora Huang

Publisher: Bloomsbury Publishing

Published: 2023-10-19

Total Pages: 281

ISBN-13: 1509949305

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This significant and timely book explores a novel market mechanism, Stock Connect, which gives mutual market access to Chinese and international investors, and provides original analyses and fresh insights. This mechanism could become the new normal in future global financial integration. By examining this cross-border scheme from a regulatory perspective via a three-tiered analytical framework (investors, issuers and regulators), this book unearths the profound implications of Stock Connect to local and global financial markets and the legal impediments to its implementation. It covers a broad range of topics in this cross-boundary investment channel, including an overview of four existing connectivity arrangements (Shanghai-Hong Kong, Shenzhen-Hong Kong, Shanghai-London and China-Switzerland), the uniqueness of these connectivity arrangements, investor protection, regulations of connect issuers, regulatory cooperation and enforcement, the impacts on local and global financial markets, the implications for the world market connectivity as well as the challenges and future of Stock Connect. This pioneering study will appeal to a broad range of readers who are interested in the on-going reshaping of international financial systems and China's emerging influence in the international financial order.

The Chinese Stock Market
The Chinese Stock Market

Author: Nicolaas Groenewold

Publisher: Edward Elgar Publishing

Published: 2004-01-01

Total Pages: 268

ISBN-13: 9781782541172

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'. . . this book succeeds in its mission of analysing the efficiency, predictability and profitability of the Chinese stock market. It is strongly recommended to scholars. It is additionally recommended to practitioners involved in the market, sharing its prosperity and avoiding the possible risk. This book is also recommended to the students who want to learn the systematic application of econometric modelling to market efficiency analysis.' - Shiguang Ma, Economic Record The emergence of a stock market in China only occurred a decade ago and it remains something of an unknown quantity to many observers and traders outside of the country. This book provides an extensive historical and empirical analysis of the Chinese stock-market, the development of which is an integral part of the process of economic modernization that began in China in the late 1970s.

The Impact of the Shanghai-Hong Kong Connect on the Market Liquidity and Price Divergence
The Impact of the Shanghai-Hong Kong Connect on the Market Liquidity and Price Divergence

Author: Karen Xiaotong Wang

Publisher:

Published: 2016

Total Pages: 0

ISBN-13:

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The economic growth of China has seen an increase in its demand for capital, fueling its local stock markets. This paper exams a market liberalisation event between China and Hong Kong and its impact on: (1) market liquidity and (2) price differentials between cross-listed stocks across the two markets. On November 17, 2014, the Shanghai Stock Exchange and the Hong Kong Stock Exchange introduced the much anticipated, Shanghai-Hong Kong Connect, a bilateral investment channel between the two markets. The new channel brings with it accesses to new capital for domestic firms and trading expertise from new foreign participants. The Shanghai-Hong Kong Connect permits mutual market access for market participants, allowing investors in each market to trade in the other market using existing trading infrastructure. This study adopts a difference-in-difference methodology and finds that market liquidity as proxied by transaction costs, improves in both markets, for eligible stocks that are traded through the bilateral investment channel, post November 17, 2014. This result is consistent with literature, which identifies the benefits of open and enhanced market access. In addition, reported results identify that the pre-existing price premium between cross-listed China A-shares and Hong Kong H-shares, increases following the market design change. Contrary to expectations, this result is attributed to the incremental improvement in liquidity in China for cross-listed stocks vis-à-vis Hong Kong. Overall, results in this study demonstrate that the partial liberalisation of fund flow between the two markets had a positive impact on liquidity, in particular for China's largest equity market the Shanghai Stock Exchange.

Chinese and Global Financial Integration through Stock Connect
Chinese and Global Financial Integration through Stock Connect

Author: Flora Huang

Publisher: Bloomsbury Publishing

Published: 2023-10-19

Total Pages: 281

ISBN-13: 1509949291

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This significant and timely book explores a novel market mechanism, Stock Connect, which gives mutual market access to Chinese and international investors, and provides original analyses and fresh insights. This mechanism could become the new normal in future global financial integration. By examining this cross-border scheme from a regulatory perspective via a three-tiered analytical framework (investors, issuers and regulators), this book unearths the profound implications of Stock Connect to local and global financial markets and the legal impediments to its implementation. It covers a broad range of topics in this cross-boundary investment channel, including an overview of four existing connectivity arrangements (Shanghai-Hong Kong, Shenzhen-Hong Kong, Shanghai-London and China-Switzerland), the uniqueness of these connectivity arrangements, investor protection, regulations of connect issuers, regulatory cooperation and enforcement, the impacts on local and global financial markets, the implications for the world market connectivity as well as the challenges and future of Stock Connect. This pioneering study will appeal to a broad range of readers who are interested in the on-going reshaping of international financial systems and China's emerging influence in the international financial order.

The Stock Connect Programs
The Stock Connect Programs

Author: Jiadi Cheng

Publisher:

Published: 2020

Total Pages: 39

ISBN-13:

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The Stock Connect programs are important steps for China to liberate its relatively restricted financial market. The Shanghai - Hong Kong Stock Connect program launched in 2014, and the Shenzhen - Hong Kong program launched in 2016 allowed both institutional and individual international investors access to the Chinese stock market for the first time. This paper studies the impact of the Stock Connect programs on Chinese stock returns and Chinese stock market's integration with international stock markets using 2SLS regression analysis. Regression results show that the launch of the SH - HK Stock Connect program increased daily returns of all four eligible indexes under Stock Connect programs but did not increase correlation between daily performances of Chinese stock market and global stock markets with statistical significance.

China Stock Market Handbook
China Stock Market Handbook

Author: jshop.javvin.com

Publisher: Javvin Technologies Inc.

Published: 2008

Total Pages: 560

ISBN-13: 1602670064

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This handbook is designed to help investors and financial professionals understand how China's stock market operates, and to harness their power to win more. It includes fundamental information of both the mainland China and Hong Kong markets.