UK to launch innovative link with Chinese stock market

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Companies listed in the UK will be the first foreign companies to be able to register in mainland China under a new stock exchange, the Treasury said.

Chancellor Philip Hammond to launch the London-Shanghai Stock Connect Monday.

The companies will sell their shares through double listings on the Shanghai and London Stock Exchanges.

The UK government has said the project will open British companies to new investors.

This initiative will also allow companies in each country to obtain capital in the other.

"Stock Connect is a revolutionary initiative that will strengthen our global connectivity as we explore new opportunities in Asia," Hammond said at the launch, according to a Treasury statement.

"London is a world financial center like no other, and the launch today is a strong vote of confidence in the UK market."

The London-Shanghai Stock Connect project took four years to develop. It will allow companies to register on both stock exchanges using certificates of deposit.

These certificates – which represent the ownership of common shares of a corporation – allow foreigners to acquire an equity interest in a company from another country without the risks associated with a direct investment in a corporation. foreign equities, such as exchange differences or accounting practices.

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More than 260 of the 1,500 companies listed in Shanghai will potentially be eligible to participate in the project and appear on the list in London.

London investors will be able to exchange Chinese investment dealer Huatai's global certificates of deposit from Monday.

The UK is seeking to tap China's growing market. China is expected to have more than $ 17 trillion ($ 13.5 trillion) in assets under management by 2030, after breaking the $ 2.8 trillion mark in 2016.