Tianjin's vice mayor said yesterday the government will implement an August 20 plan for the city's citizens to buy and sell stocks in Hong Kong.

 

It will mark the first time individual Chinese mainland investors have been allowed to trade equities outside the mainland, Bloomberg News reported. The so-called "through-train" plan, delayed because of "issues with timing and conditions," will have no problems with implementation, Vice Mayor Cui Jindu said at an investment forum in Beijing.

 

The pilot program will be extended to other Chinese cities "over the long term," he said.

 

China's currency regulator said on August 20 that citizens with Bank of China Ltd accounts in Tianjin would be allowed to buy Hong Kong equities in a plan aimed at draining excess cash from the economy.

 

The program was delayed after objections by the securities and banking watchdogs, three officials at the banking regulator said on September 5.

 

The program wasn't scrapped and will expand to a "multi-bank and multi-city" scale, former central bank adviser Li Yang said yesterday at the conference. Li is research head of finance at the Chinese Academy of Social Sciences.

 

The Chinese government, which is committed to letting Chinese investors buy in Hong Kong, must "guarantee financial stability," Hong Kong's Chief Executive Donald Tsang said in Beijing last Friday after meeting Chinese officials.

 

HK's Hang Seng Index rose as much as 4.7 percent yesterday, the biggest intraday rise in 11 days, after Cui's comments. The index plunged five percent on November 5, the steepest fall since the September 11, 2001, terrorist attacks, after Premier Wen Jiabao said the program may be delayed.

 

The government needs to study the risks, increase knowledge among mainland investors and prepare regulations to protect the stock markets in Hong Kong and on the mainland before launching the program, Wen said on November 3.

 

(Shanghai Daily November 30, 2007)