Premier says caution necessary before opening floodgates to Hong Kong shares

2007-11-03 HKT 18:26

Premier Wen Jiabao says it's necessary to study the impact on Hong Kong financial markets before opening the floodgate allowing mainlanders direct purchase of stocks here. Pledging to safeguard the stability of the Hong Kong stock market, Mr Wen said Beijing would also prevent shocks to markets at home. Speaking to Hong Kong reporters in Uzbekistan, Premier Wen said a comprehensive study was necessary to assess how the territory's stock market would be affected by mainland stock investment coming to Hong Kong. Mr Wen said this was because the Hong Kong stock market would be awash with mainland money on the back of ample liquidity and high bank deposit rate on the mainland. However, the Premier said Beijing would also seek to resolve problems faced by its domestic stock market. He said there had to be regulations on the outflow of capital which the Premier said might bring turbulence to stock market and the economy on the mainland. He said Beijing would listen to views from Hong Kong authorities before allowing the money flowing to Hong Kong. The so-called "through train" scheme was first unveiled in August and had choosen Tianjin as a testing ground. But little progress had been heard since.

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