Hong Kong Exchanges Says China Link Quota Will Be Expanded

Hong Kong Exchanges & Clearing Ltd., the world’s biggest bourse operator by market value, expects the trading limits for the equity link with China will be increased.

The exchange had record trading turnover for two days this week as Chinese investors used up their daily quota for buying Hong Kong stocks through Shanghai. They bought 10.5 billion yuan ($1.7 billion) of shares on both Wednesday and Thursday.

“There will definitely be an expansion,” HKEx’s Chief Executive Officer Charles Li said Friday in Hong Kong in Mandarin. “The expansion won’t simply be 20 percent to 30 percent. If there’s an expansion, it must be of a certain magnitude,” of the quota, he said.

Regulators in Hong Kong and China would need to agree on increasing the quota, and the authorities are also developing plans for one more trading connection with the Shenzhen exchange, said Romnesh Lamba, HKEx’s co-head of global markets. The equity link with the Shanghai exchange started in November with a 550 billion yuan overall limit on the value of equities investors can hold, and also has daily caps.

“Regulatory authorities have been discussing quota expansion for a while,” said Li. “The quota will not be adjusted instantly following an abrupt market move. It will be an orderly adjustment and the market should wait patiently.”

Hong Kong stocks jumped this week, with the benchmark Hang Seng Index gaining 7 percent, the most since December 2011.

“The whole aim of having a quota is to ensure stability for when the link started, and we’ve basically now reached stability,” Li said. “Everybody should have a little patience.”

The Hong Kong exchange is developing new products, which can be included in the link between the former British colony and China, Li said.

(An earlier version of this story corrected the date for the start of the exchange link.)

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