Launch of Shanghai-Hong Kong Stock Connect Delayed

Shares in stock exchanges operator, Hong Kong Exchanges and Clearing, have fallen to a six-month low following indefinite delay in the launch of a stock-trading link between Hong Kong and Shanghai.

The shares are trading down 4.19% in Hong Kong as at 1:30am ET.

Earlier, the company said in an announcement that the Shanghai-Hong Kong Stock Connect has not received regulatory approval to commence operations, even if it is ready to be implemented.

"The parties are technically ready to implement Stock Connect. However, at the date of this announcement, HKEx has not received the relevant approval for the launch of Stock Connect, and there is no firm date for its implementation," the company said.

There have been market expectations that Stock Connect, which is regarded as one of the biggest market developments in China for decades, will commence its operation in October 2014.

The scheme is designed to grant foreign investors access to China's $4tn stock market, integrating it with the rest of the global financial system.

Announced by Chinese premier Li Keqiang in April, Stock Connect will allow global investors, institutional and retail, to trade Shanghai "A" shares via the Hong Kong stock exchange while Chinese mainland investors will be able to trade Hong Kong "H" shares via the Shanghai Stock Exchange for the first time.

Some speculate that the delay is due to the political protests in Hong Kong, while some others attribute it to technical and regulatory issues.

Separate tax regimes in Hong Kong and mainland China could make the implementation of Stock Connect troublesome, according to some analysts.

Speaking to the media, Hong Kong Exchanges and Clearing Chief Executive Charles Li said a number of factors are to be taken into account by the authorities before granting approval to the scheme.

He refused to set a launch date, but hoped it will be fixed soon.

Li added that the scheme has a long-term strategic significance to both mainland and Hong Kong and help China's internationalisation of the yuan. It will help contribute to Hong Kong's prosperity in the next 10 to 20 years, he said.

Referring to the Occupy Central movement, which has being ongoing in Hong Kong for almost a month, Li said although the financial market is stable at the moment, the sector is going to be affected if the movement continues.