China opens the door for biotech investors in Hong Kong to buy Shanghai stocks, and vice versa
When Shanghai’s STAR board began opening its doors to biotech, it was considered not just a rival to Nasdaq but also the stock exchange in Hong Kong. Those perceptions may take an amicable turn as China expands a mutual access program with the city.
The changes mean investors in mainland China will be able to own Hong Kong biotech chapter stocks, while those in Hong Kong — a much more internationally connected group — would have access to those listed on STAR. In effect, it turns the Shanghai market into a globally accessible exchange overnight while also broadening a key source of revenue for HKEX.
For independent investor Brad Loncar, that’s a “pretty big deal.”
“So if you are a company, it opens you to a market of 100’s of millions of potential new shareholders,” he wrote to Endpoints News.
The move was announced during Hong Kong Chief Executive Carrie Lam’s policy address, the first she’s delivered to a legislature without effective opposition. The Chinese government, she said, has agreed to “accelerate the pace of the inclusion of pre-profit biotechnology listed in Hong Kong and stocks listed on the Mainland Sci-Tech Innovation Board meeting certain prescribed criteria” for a program that links the two exchanges.
China has been pushing to reform its capital market in a bid to attract foreign investors. Aside from Shanghai, which has recently seen vaccine developer CanSino reap a $748 million windfall, Shenzhen has also set up its own biotech programs on ChiNext.