One of the most ambitious projects that China is working on is the “One Belt – One Road’ initiative. The aim of this is to connect the entire Asian, European and African belt through a single road that runs between them. In this regard, China has spent billions of dollars developing infrastructure such as roads and other facilities in the countries that lie along the route of this project. And it’s not just a road that will link all these countries, they will also be linked through digital trading platforms. The London-Shanghai Stock Link is an embodiment of this concept.
The expected time line
Negotiations between the UK and China first began back in 2015 to link two of the world’s largest bourses together, so that investors in both countries could trade in securities and other instruments as well as invest in budding businesses directly. While plans had still been under discussion with no clear timeline emerging, the onset of 2018 came bearing good news for people awaiting this announcement.
Yi Gang, the Governor of the People’s Bank of China confirmed that the country will open a direct link between its biggest stock exchange and the LSE by the end of 2018.
China opening up to foreign investments in seen as a promising sign that will aid in the country’s development and growth. A few years earlier, China established a link of its mainland bourse with the Hong Kong Stock Exchange in order to make trading between the two halves of the country simpler.
Benefits for London
Ever since the people of the UK voted in a referendum to initiate Brexit, the country has faced staunch economic challenges. The London-Shanghai Stock Connect will help businesses in London tap into the expanding and vast potential of the Chinese economy allowing substantial positive changes to occur for the UK.
What China is set to gain from the link
China has the most to gain from the opening of the link with London. Figures had shown that when the Hong Kong Stock Exchange was linked to the mainland equity market, there was a considerable influx of funds and the market bounced up. Experts believe that the opening of the London-Shanghai Stock Connect will have similar influence on both stock exchanges helping investors make healthy profits. China will also be opening access to other investors from around the world through its London link because of the fact that it is more accessible to trade from the UK rather than having to travel all the way to mainland China.
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