(ECNS) -- The Shenzhen-Hong Kong Stock Connect program will not eliminate the price gap between A and H shares traded on the two stock exchanges, said Li Xiaojia, CEO of Hong Kong Exchanges and Clearing (HKEx) on Sunday.
But in the long run, the program will help narrow the gap as it offers more options and freedom for investors in both exchanges, he noted.
Li said it is just a matter of time before A shares -- those traded on exchanges in Shanghai and Shenzhen -- are incorporated into major international indices, as China is now the world's second largest economy.
The launch of Shenzhen-Hong Kong Stock Connect will help further open the mainland market to overseas investors, said Li, in particular through the removal of quotas, which will facilitate transactions and offer more freedom to investors. It will also prompt major international indices to include the mainland's A-shares in their baskets of stock prices, it was added.
Shenzhen-Hong Kong Stock Connect will be expandable and a new type of investment product, Exchange Traded Funds, will be added after the program has been up and running for some time.
The initiative uses the same model as Shanghai-Hong Kong Stock Connect and keeps a daily quota in place for risk control considerations, according to Li.
