Shanghai And Hong Kong Forced Mainland Stock Market To Fill Loopholes To Help A Shares Enter Slow Bull Market

The Shanghai and Hong Kong link that affects the A share market has finally landed.

The SFC recently announced that it would officially launch the pilot scheme of interconnection mechanism between Shanghai and Hong Kong Stock Exchange in November 17th, which has given the mainland and Hongkong investors a reassurance. The Shanghai Composite Index has risen sharply, breaking through the 2500 point mark and setting a new high in the past 3 years.

The opening of Shanghai and Hong Kong links can be described as a good job for investors. Investors' confidence was frustrated after expectations that the opening of the end of October had failed.

"Shanghai and Hong Kong through the announcement since the launch, the market has high expectations."

Gui Haoming, chief market analyst at Shenyang Wanguo Securities Research Institute, said that the date of formal confirmation of the opening date has made people worry about the shelving of Shanghai and Hong Kong through the meeting, which is a very positive news for the market.

Dong Dengxin, director of the financial and Securities Research Institute of Wuhan University of Science and Technology, told our reporter that the main reason for the delay in opening nearly 20 days was that the preparatory work for the trading system, trading rules, capital cross border settlement receipts and payments, and tax system docking was not yet in place.

However, from the current background of Shanghai and Hong Kong's launch, the timing is already very mature.

In the short span of 7 years since the financial crisis, China has moved from the big exporter of goods to the capital exporting power.

Enterprises going abroad and investment facilitation and internationalization have become the most powerful demand of Chinese society. At the same time, the internationalization of RMB and the construction of offshore market in Hongkong are constantly advancing.

The opening of the Shanghai and Hong Kong links is of great significance to the mainland and Hongkong stock markets.

Dong Dengxin said that Hongkong and Hong Kong are the integration and interconnection of the stock market and the mainland stock market. The two big markets, through resource integration and resource sharing, are conducive to enhancing the international status and international competitiveness of the two markets. This is a pattern of mutual benefit and win-win situation.

As a highly open international investment market, the Hong Kong stock market has a very important guiding function and exemplary role in the mainland stock market in terms of valuation standards, investment philosophy and dividend policy (quarterly dividend policy).

Especially in the process of marketization, legalization and internationalization of the mainland stock market, many experiences and practices of Hongkong stock market are worth learning from.

In fact, compared with the mainland stock market, Hongkong securities market has developed more mature, from the basic game rules, to the system, concept, trading mechanism, product line, supervision and other aspects are closer to the developed capital market.

Therefore, the biggest significance of Shanghai and Hong Kong is to force the structural reform of the A share market through the "interconnection" with the Hong Kong stock market, so as to solve the existing institutional obstacles and chronic diseases.

In the opinion of financial commentators, the A share market is ill in the system.

Only by solving the institutional problems and speeding up the release of capital potential, can the economic growth under the new normal get more nourishment of blood nutrition, and the prescription is to open up to the outside world.

Since we can't read well, we may as well try our best.

The decision making process of Shanghai and Hong Kong has explained that this is not a general economic decision, but a top-level design of political decision-making. Now this decision seems to kill two birds with one stone. The A shares are shipped out by boat and Hong Kong stocks are "curve saving the nation".

No doubt, the opening of Shanghai and Hong Kong links means more free cross-border capital flows, which will open up a channel between the mainland and Hongkong investors in the A share market and overseas funds, which is undoubtedly a major positive for the A share market. It also means that the internationalization of the A share market is greatly improved and the RMB is further internationalized.

"At present, the valuation of the A-share market is at a low level globally, especially in the Shanghai market represented by blue chips, and the investment target of Shanghai Stock Exchange in Shanghai and Hong Kong through the pilot scheme is mainly composed of good quality Shanghai 180 Index and Shanghai Stock Index 380 constituent stocks. Whether from the perspective of vertical historical comparison or horizontal international comparison, these blue chips have valuation advantages and are expected to attract more international capital to flow into the A share market through Hong Kong and Shanghai, and inject new vitality into the sustainable development of the market."

Li Daxiao, director of the British Securities Institute, said.

But we should also see that the formation of bull market is the result of many factors, such as macroeconomic fundamentals and fundamentals of the stock market, and these factors will not be substantially changed because of the Shanghai and Hong Kong Exchanges.

Gui Haoming believes that after the opening of Shanghai and Hong Kong, the favorable time will be displayed. There will be some concussion in the short term market. In the long run, the opening of Shanghai and Hong Kong will not change the fundamental trend of the market, nor will it lead to a sharp rise in the market.

Dong Dengxin also pointed out that Shanghai and Hong Kong can guide international capital and institutional investors to the A share market, which is conducive to restoring and upgrading the valuation of large blue chips and guiding mainland listed companies to learn "quarterly dividend", thus helping the mainland stock market enter a new pattern of long term "slow cow".