China’s securities regulator will ban over a million mainland investors from accessing its own market via the Hong Kong cross-border schemes, calling such trading activities «fake foreign capital».
Mainland investors with Hong Kong accounts can no longer purchase A-shares through the northbound channel of Hong Kong’s Stock Connect scheme, according to the China Securities Regulatory Commission, effective July 25.
Brokers based in the city will stop issuing trading permits to mainland Chinese investors. There will be a one-year grace period to handle such existing clients, after which only the sales of the remaining shares will be allowed.
According to the CSRC, there are around 1.7 million mainland investors who have access to the northbound trading channel with 39,000 being active in the past three years. Although they make just 1 percent of total turnover, the regulator highlighted concerns such as risk in cross-border capital flows.
