A program allowing Chinese mainland individuals to invest directly in Hong Kong equities won't be implemented until risk management measures are in place, Hong Kong Monetary Authority Chief Executive Joseph Yam said yesterday.

"The focus now is risks to Hong Kong and China mainland's financial markets and how to protect investors' interests," Yam told a press conference in Beijing. "Once we identify the risks, we will begin driving. We have no timetable."

China's government on August 20 announced a pilot program under which nationals with a Bank of China Ltd account in Tianjin would be allowed to buy Hong Kong equities. The Hang Seng Index has surged as much as 42 percent since then, prompting China's Premier Wen Jiabao to say on November 3 that the government needed more time to assess the risks to the stability of Hong Kong's financial system.

Yam said he had "very fruitful" discussions with officials including Liu Mingkang, chairman of China Banking Regulatory Commission in Beijing, and Zhang Xiaoqiang, the vice minister of the National Development and Reform Commission.

China is considering scrapping the so-called "through-train" pilot program, the South China Morning Post reported, citing a Chinese academic.

The government may instead set up a "general system" under which qualified institutions could conduct business with Hong Kong "and beyond", the Hong Kong-based newspaper quoted Li Yang, finance institute director at the Chinese Academy of Social Sciences, as saying

(Shanghai Daily November 16, 2007)