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Foreign banks to benefit from launch of Shanghai-HK stock connect program

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2014-11-12 GMT+8:00

BEIJING, Nov. 11 (Xinhua) – Foreign banks, such as Citigroup, HSBC Bank and Hang Seng Bank, will benefit from the launch of the Shanghai-Hong Kong stock connect program, and some foreign banks plans to introduce products pegging the Hang Seng Index before the end of this year, according to a reportby released by Xinhua-run Shanghai Securities News on Tuesday.

Foreign banks with relatively wide business coverage in Hong Kong will on one hand share more income from securities trading commission, and they will on the other hand obtain new income growth point via relevant new funds connecting businesses on Chinese mainland.

According to the report, Citigroup's market and securities service department will offer services for institutional investors on the first day for the start of the program, which is scheduled on November 17.

The HSBC Bank and Hang Seng Bank are also well prepared for this on Hong Kong market.

For foreign banks in Hong Kong, the Shanghai-HK stock connect program will help push up their income from securities trading commissions and exchange gains.

Though foreign banks have no securities business license on Chinese mainland, they will receive more income from relevant banking business amid capital flow between Hong Kong and Chinese mainland, and they can introduce new fund products pegging Hang Seng Index, according to a senior executive of a foreign bank.

The Hang Seng Bank and the Bank of East Asia (BEA) both plan to unveil new fund products pegging the Hang Seng Index on Chinese mainland before the end of this year, said the report.

With the start of the Shanghai-HK stock connect program, similar mechanism is expected to be expanded to the Shenzhen Stock Exchange, according to banking insiders.

Sun Yu, chief strategist of HSBC Bank (China), holds that Shenzhen-Hong Kong stock connect program is expected to come out in the second quarter of 2015.

In addition, clients will not be bothered by the short-term quota set for the Shanghai-Hong Kong stock connect program, and the medium and long-term quota is expected to increase, according to a strategist of a foreign bank, predicting the program will cast little pressure on RMB appreciation in Hong Kong market.

China will introduce more flexible polices to gradually relax control on overseas investment, said the above-mentioned senior executive of a foreign bank. (Edited by Hou Yujie, houyj@xinhua.org)

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