China to expand quota, number of shares investors can trade on HK-Shanghai Connect

China to expand quota, number of shares investors can trade on HK-Shanghai Connect

BEIJING, Nov 17 (Reuters) - China will expand the trading quota and number of shares investors can trade on the Hong Kong-Shanghai Stock Connect, a securities regulator official said on Tuesday.

The regulator will also continue to push forward with the proposed Hong Kong-Shenzhen Stock Connect scheme, said Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), according to a statement on the watchdog's website.

Fang's comments, made on the one-year anniversary of the Stock Connect, reiterate previous plans to expand the programme's scope once it had matured.

The scheme was originally anticipated to attract mass foreign fund flows into Chinese stocks. But it has so far struggled to fill its current quotas.

An expansion is being planned even though the northbound quota into Shanghai is at 40 percent of its limit, while the southbound quota is at 37 percent.

But that plan, including expanding the Stock Connect scheme to the Shenzhen exchange, stalled after mainland bourses tumbled 45 percent between June and August and Beijing intervened through a range of measures to stop the plunge.

Global banks and investors have also warned Chinese regulators that proposals to curb high-speed trading, blamed for China's summer stock market crash, would inadvertently sabotage major investment channels worth around $160 billion, including the Stock Connect scheme.

Tuesday's comments from the CSRC's Fang come amid growing fears that Beijing is responding to the summer rout by halting or even reversing reforms to allow greater access to its capital markets. (Reporting by Paul Carsten and Beijing Newsroom; Additional reporting by Pete Sweeney in Shanghai; Editing by Richard Borsuk and Sanjeev Miglani)

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