Shanghai Stock Exchange, China. Picture: REUTERS/ALY SONG
Shanghai Stock Exchange, China. Picture: REUTERS/ALY SONG

London — Britain and China began selling shares in each others’ companies on Monday under a landmark deal, Britain’s treasury announced as London seeks to remain a leading financial centre post-Brexit.

Launch of the London-Shanghai Stock Connect marks “the first time that any foreign company will be able to list in mainland China”, said the UK's treasury as Britain works to extend close trading ties with the Asian powerhouse, despite strains caused by the Huawei fallout.

The announcement on Monday was the centrepiece of the UK-China economic and financial dialogue, the treasury said.

Chancellor of the Exchequer Philip Hammond was hosting China’s Vice-Premier Hu Chunhua and a delegation “to discuss multilateral and bilateral economic issues, financial services co-operation, and trade and investment”, it said.

Hammond said: “London is a global financial centre like no other, and today’s launch is a strong vote of confidence in the UK market.

“Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia.”

Fresh capital

The link-up allows investors to trade across London and Chinese time zones and ultimately raise fresh capital, though unlike UK companies not every Chinese-listed firm is eligible to take part.

“The culmination of four years’ work, Stock Connect will mean, for the first time, that international investors will be able to access China A-shares from outside of Greater China, and through international trading and settlement practices,” the UK treasury said. 

“Stock Connect will not require any direct trading infrastructure links." 

There are almost 1,500 companies listed in Shanghai, including more than 260 potentially eligible to take part in Stock Connect and list in London.

Catherine McGuinness, policy chief for the City of London financial district, described the agreement as “good news for the UK, China and the wider global economy. Innovation is key to London maintaining its position as a leading international financial hub.”