China-UK Ties: Expert: Shanghai-London stock connect to better regulate China's A-share market

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After more than three years in the making, the highly-anticipated Shanghai-London Stock Connect is expected to be launched later this year. But it's expected to face many stiff challenges early on -- one of which is the eight-hour time difference between the two mega-cities. CGTN's Li Jianhua spoke to some industry experts in Shanghai to find out more about the scheme.

From Shanghai to London and from London to Shanghai, Investments are now expected to flow both ways more easily.

Though the Stock link is promising, many challenges still lie ahead - most notably the time difference and varying transaction modes.

YANG ZONGNING CONSULTANT, GUODU SECURITIES "The most notable challenge is time difference for sure. Unlike the Shanghai-Hong Kong Stock Connect and Shanghai-Shenzhen Stock Connect, the Shanghai-London Stock link involves a time difference of eight hours."

But many don't foresee that this will be a big problem.

ETHAN WANG, HEAD OF INVESTMENT STRATEGY STANDARD CHARTERED BANK, CHINA "The depository receipts methods will likely be used. With this method, Chinese shares can be traded on the London Stock Exchange, and vice versa. This way, we can break the barrier posed by the time difference."

China's A-share market uses the T plus one transaction mechanism. For stock markets in Europe and the US, it's T plus zero.

Methods such as the Shanghai-Hong Kong Stock Connect and the Qualified Foreign Institutional Investors, or Q-F-I-I, have been introduced to let foreign capital flow into China's A-share market. So why is the Shanghai-London Stock Link needed?

ETHAN WANG, HEAD OF INVESTMENT STRATEGY STANDARD CHARTERED BANK, CHINA "The London Stock Exchange could be said to be the most important and biggest in Europe. Many excellent companies choose to go public here. Through the London Stock Exchange, we can further our investments in the European markets and even beyond that."

With the UK currently bogged down in Brexit negotiations, some experts say a stock link with China will help stabilize London's edge among the global markets.

XU MINQI, DIRECTOR EUROPEAN STUDIES CENTER, SHANGHAI ACADEMY OF SOCIAL SCIENCES "It's going to promote London's financial market status, because of Chinese capital market's potential - it's a big market, it's still growing. If London has a channel to invest in China's domestic capital market, it's going to improve London's global financial status."

Meanwhile, others believe the Shanghai-London Stock Connect -- like the indices and tools provided by investment research firm MSCI -- will help purify management of China's A-share market.

YANG ZONGNING CONSULTANT, GUODU SECURITIES "Whether it's MSCI or the Shanghai-London Stock link - they all will help regulate the A-share market. From this perspective, these two mechanisms will be beneficial for China's stock market regulation."

LI JIANHUA SHANGHAI "The Shanghai-London Stock Connect is believed to be beneficial for both the UK and China - British capital could flow into the Chinese market, and vice versa. But more importantly, the experts are saying, that the connect will help China better regulate its A-shares market in the future. LJH, CGTN, SHANGHAI."