A financial scheme linking investors in London and Shanghai launched last year has been reportedly put on pause by Beijing, in response to what is perceived as British meddling in Hong Kong protest.
The Shanghai-London Stock Connect allows certain companies listed on the London Stock Exchange and the Shanghai Stock Exchange to issue depositary receipts on the other bourse. This offers international investors a backdoor access to the Chinese financial market, solidifying London’s roles as a financial capital that was shaken by Brexit. And Chinese traders get a chance to deal in stocks of international companies through Shanghai.
The connect was launched in June 2019, but has now been put on pause, according to Reuters, which cited five sources involved in talks with Chinese officials. The reason is said to be political: Beijing is not happy with how the British government responded to months-long protests in its former colony, Hong Kong.
The anti-government rallies, which are often marred by violence, have disrupted the economy of the autonomous Chinese city. The protesters have been calling on London to intervene on their behalf and protect them from the Chinese government, which they claim was infringing on Hong Kong’s autonomy.
Beijing warned foreign governments, including the British one, against getting involved in the situation, calling it a domestic issue. China said the statements of support by foreign officials amounted to instigating riots and were unacceptable.
So far, the Shanghai-London Stock Connect played more a symbolical than practical role, a gesture of goodwill and trust-building. Huatai Securities was the first and only company to use the scheme. Chinese power generation company SDIC was supposed to offer its global depositary receipts in London in December, but postponed its plans citing weak market conditions.
