Russian stock exchange to start trading Hong Kong shares

Russia’s St. Petersburg Stock Exchange has announced it will allow 12 Hong Kong stocks to be traded from Monday, June 20, raising concerns that Russians are using Hong Kong to evade Western sanctions. It is still unclear how the proposed cross-border stock trading can be done without SWIFT.

According to the SPB Exchange announcement, brokers will be able to trade 12 Hong Kong stocks from June 20. The 12 companies include CK Hutchison Holdings, WH Group, Tencent Holdings, CK Asset Holdings, Sino Biopharmaceutical, Xiaomi Corp, Sands China, Country Garden Holdings, Sunny Optical Technology Group, Meituan, Alibaba Group and JD.com.

Sputniknews, a Russian news agency, said the number of Hong Kong-listed stocks that could be traded on the SPB Exchange would increase to 50 in two months, 200 by the end of this year and more than 1,000 l ‘next year.

Mankevich Vitaly Vikentievich, chairman of the Russian-Asian Union of Industrialists and Entrepreneurs (RASPP), was quoted in Friday’s Sputniknews report as saying that Russians could diversify their investments by trading Hong Kong stocks.

A head of Russian Alfa Group’s equity trading department told Sputniknews that Russians will increase their investment in Chinese assets, particularly in Hong Kong’s IT sector, due to growing risks of seeing their foreign assets frozen by the West in an unstable geopolitical context. He said some Russians would convert their euros and US dollars into renminbi.

Currently, the SPB exchange allows brokers to trade 17 overseas-listed stocks, mostly US-listed companies, such as Citibank, Bank of New York Mellon, and Lumen Technologies. A statement titled “SPB Exchange operating normally” has remained at the top of the exchange’s website since late April, but it’s unclear how it can trade foreign stocks without SWIFT.

Herman Gref, president of Sberbank, said at the St. Petersburg International Economic Forum on Friday that Sberbank had stopped clearing its cross-border contract payment service in Chinese currency from June 7, but the service had already resumed. .

Meanwhile, the Hong Kong exchange said it had not formed any partnership with the SPB exchange. He said on Friday that he believed the program was part of the SPB Exchange’s global issuer promotion program.

Last August, Joseph Yam, a member of the Executive Council and former chief executive of the Hong Kong Monetary Authority, said Hong Kong had a role to play in helping to connect the mainland’s and foreign countries’ financial markets. He suggested that investors be allowed to buy Hong Kong stocks in renminbi and sell them in the Hong Kong dollar currency, which is pegged to the US dollar.

Yam’s suggestion has so far not been implemented. However, the Hong Kong Monetary Authority (HKMA) said in early May that it had prepared contingency plans in case Hong Kong or mainland China were finally sanctioned by the United States.

The old St. Petersburg Stock Exchange. Photo: Wikimedia Commons

Penalty sets

The latest program was announced after Chinese President Xi Jinping and Russian President Vladimir Putin agreed on Wednesday to push for a steady and long-term development of practical bilateral cooperation between China and Russia.

A US State Department spokesman on Thursday criticized China for forging closer ties with Russia and accused Beijing of echoing Russian propaganda around the world.

The United States and the European Union have imposed several rounds of sanctions on Russian officials, banks and oligarchs since Russian troops invaded Ukraine on February 24.

On March 12, SWIFT disconnected seven Russian banks and their designated Russian-based subsidiaries from its money transfer network. Banks sanctioned include Russia’s second largest bank, VTB, as well as Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB.

EU leaders said they had agreed in principle on May 30 to cut oil imports from Russia by 90% by the end of the year and also agreed to other sanctions, including the withdrawal of Russia’s largest lender, Sberbank, from SWIFT. The West has also urged China to refrain from helping Russia evade sanctions.

Xi and Putin on Wednesday held their first phone call since issuing a joint statement on February 4 to “oppose further expansion of the North Atlantic Treaty Organization (NATO) and call on the Alliance to the North Atlantic to abandon its ideologized Cold War approaches”.

Xi told Putin on Wednesday that China is willing to work with Russia to continue to support each other on each other’s core sovereignty and security interests and major concerns and deepen their strategic coordination.

He said the two countries will strengthen communication and coordination within international and regional organizations such as the United Nations, the BRICS mechanism and the Shanghai Cooperation Organization.

Xi said China is also willing to work with Russia to promote solidarity and cooperation between emerging and developing countries and push for the development of international order and global governance in the world. a more just and reasonable direction.

The Kremlin said the two countries agreed to expand cooperation in the areas of energy, finance, industry, transport and others, taking into account a global economic situation that has become more complicated by the West’s sanctions policy – which Moscow has called illegitimate.

A US State Department spokesperson noted that China claimed to be neutral, but said Beijing’s behavior made it clear it continued to invest in close ties with Russia.

The US spokesman said the world was watching to see which nations upheld the fundamental principles of freedom, self-determination and sovereignty, and which backed or tacitly supported Russia in its premeditated and unprovoked war of choice.

Read: Call on Hong Kong to prepare for possible US sanctions

Read: Chinese media are mounting a massive campaign against Zelensky

Follow Jeff Pao on Twitter at @jeffpao3

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