Shanghai-Frankfurt Stock Link in the Works
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In another move to internationalize Chinese markets, plans are underway for a Shanghai-Frankfurt stock link driven in part for Europe’s «unabated eagerness» for collaboration with the second-largest economy.
The China Europe International Exchange (CEINEX) is currently preparing for a stock connect program, according to state media, which reflects European countries’ «unabated eagerness» for Chinese collaboration in areas such as finance.
CEINEX did not disclose the exact data of the Shanghai-Frankfurt stock link launch but state media highlighted that it could be rolled out in the next one or two years.
The program is expected to allow Germany-based blue chips to issue Chinese depositary receipts on the Shanghai Stock Exchange and for mainland-based firms, especially manufacturers, to issue global depository receipts on exchanges in Frankfurt.
Listings aside, onlookers believe there are synergies to be realized by Germany due to its significant base of industrial powerhouses such as Mercedes Benz or BMW which could benefit from cooperation with China which has withstood the downward economic cycle in sectors such as an automobile.
In addition to opening up markets, stock link is expected to be the first in a series of moves to boost financial cooperation between China and Europe.
Questions & Answers
Q.What is the primary aim of the Shanghai-Frankfurt stock link?
What is the primary aim of the Shanghai-Frankfurt stock link?
The program is expected to allow Germany-based blue chips to issue Chinese depositary receipts on the Shanghai Stock Exchange. It will also let mainland Chinese firms, especially manufacturers, issue global depository receipts in Frankfurt.
Q.Which entity is preparing for this stock connect programme?
Which entity is preparing for this stock connect programme?
The China Europe International Exchange (CEINEX) is currently preparing for the stock connect programme. This initiative reflects European countries' strong interest in collaboration with China.
Q.When is the Shanghai-Frankfurt stock link expected to be launched?
When is the Shanghai-Frankfurt stock link expected to be launched?
CEINEX did not provide an exact launch date for the Shanghai-Frankfurt stock link. However, state media has highlighted that it could be rolled out within the next one or two years.
Q.What benefits might Germany gain from this cooperation?
What benefits might Germany gain from this cooperation?
Onlookers believe Germany could realise synergies due to its significant base of industrial powerhouses like Mercedes Benz or BMW. These companies could benefit from cooperation with China, which has maintained its economic strength in sectors such as automobiles.
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