Limited impact from 'through train' delay: analysts

The delay of the much-anticipated stock trading link between Shanghai and Hong Kong has become a certainty, but analysts see limited impact on the Chinese equity market.

The start of the Shanghai-Hong Kong Stock Connect will miss the widely assumed date of next Monday, given that the China Securities Regulatory Commission made no announcement on the progress of the program during Friday's regular news conference.

Analysts said the delay reflects regulators' concern that there should be sufficient preparation to assure a smooth launch of the program, which could generate daily transactions of billions of dollars.

Some saw the delay as having little impact on the markets because institutional investors are likely to take a wait-and-see attitude toward the program even after it starts.

"Most of our long-only fund clients are not concerned about the possible delay, as they were not planning to or not able to join the Stock Connect program from the very beginning for various reasons", Japan-based Nomura Securities International Inc said in a report.

"They are likely to stay on the sidelines for the first three to six months monitoring how the Stock Connect program goes," it said.

Li Daxiao, chief economist at Yingda Securities Co Ltd, said that some foreign institutions might need additional time to prepare for the program.

Other analysts said the delay may cause frustration and disappointment in the markets in the short term. The benchmark Shanghai Composite Index on Friday posted its biggest weekly loss since March, declining by 1.64 percent.

"Hedge fund clients seem more concerned about the starting date of the Stock Connect as they are more eager to trade A shares via the program," Nomura said.

Earlier media reports said that the Asia Securities Industry & Financial Markets Association had asked the Hong Kong stock regulator to delay the launch on the request of some banks and asset managers.

It cited concerns over uncertainties involving program rules, technical issues and tax policies. It also asked for its members to be given a month's notice before the launch.

Some institutional investors expect the launch of the program to be delayed to early November or December.

But Charles Li, chief executive of Hong Kong Exchanges & Clearing Ltd, said that investors should not read much into the timing of the program.

Li added that regulators might not necessarily announce the launch date one or two weeks in advance.

Announced by Premier Li Keqiang in April, the cross-border trading program has been seen as a milestone in the opening of China's capital markets.

It will allow international investors to trade selected Shanghai-listed A shares via Hong Kong with a daily trading quota of 10.5 billion yuan ($1.72 billion).

Chinese mainland investors will also be able to trade Hong Kong-listed H shares with a daily quota of 13 billion yuan.

Cai Xiao contributed to this story.

Four-party agreement signed for Shanghai-HK stock connect	Derivatives to take off with 'through train'