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China halts LSE link over HK tensions - sources

Credit: Reuters Studio
Published on January 2, 2020 - Duration: 01:54s

China halts LSE link over HK tensions - sources

China has temporarily blocked planned cross-border listings between the Shanghai and London stock exchanges because of political tensions with Britain, sources have told Reuters.

David Pollard reports.

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China halts LSE link over HK tensions - sources

The Shanghai-London Stock Connect scheme ... Launched last June, it was to be a breakthrough in UK-China financial ties.

But it is now instead a mechanism for Beijing to signal disapproval of London's stance on the protests in Hong Kong.

That's according to sources speaking to Reuters, with the reports coming a day after chaos again erupted in the Chinese-ruled city.

All those sources say politics is behind a Chinese decision to temporarily suspend the scheme.

China has blamed the unrest on interference by foreign governments, including the UK and the US.

The news is a setback for Connect's programme of cross-border share listings.

China's firms were to get a wider reach to tap funding, its investors more access to UK companies, in return for a major step by China to open up its capital markets.

Britain also saw Connect as a possible hedge against a challenging future, according to then finance minister, Philip Hammond.

(SOUNDBITE) (English) BRITISH FINANCE MINISTER, PHILIP HAMMOND, SAYING: "Our Chinese partners are clear that whatever happens in the Brexit negotiation they are very happy to deepen the relationship with the UK as we go forward." For the London Stock Exchange, it's bad timing: amid Brexit uncertainty, Refinitiv data shows it's just suffered its worst year for new listings in a decade.

Chinese power firm SDIC pulled its London share offer last month.

Sources say China Pacific Insurance's debut there is also on ice.

In Hong Kong itself, meanwhile, HSBC's local financial services have taken a battering in its most important market.

Two branches, and clusters of ATM cash machines, were attacked by protesters.

They say the bank is complicit in actions to cut off some of their funding -- a link HSBC denies.

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