A plan to connect the giant stock markets of Shenzhen and Hong Kong offers global investors tempting access to China's fast-growing tech sector. Buts as Tara Joseph reports, money managers say high valuations and a reputation for wild speculation are likely to keep many buyers at bay.
What's it going to take to breathe fresh life into China's sagging stock market? For a few short days this summer it looked like markets might have been able to crawl back from a long and painful decline. Late on Tuesday Hong Kong and mainland China officials announced a fresh program to the connect Hong Kong's internationally accessible stock market with the southern Shenzhen exchange. But Investors are not exactly jumping up and down. Officials are hoping that by linking the Hong Kong and China exchanges, eager foreign investors will help breathe fresh life into the markets - There's also a hope Chinese stocks can be included in major global benchmark indices boosting their exposure to big heavyweight funds. Shenzhen is the world's second busiest and tech-heavy exchange with turnover of more than 1-trillion dollars. Opening up the market to foreigners could entice players in. But there are still many barriers at play. Companies listed on the exchange are seen as both volatile and expensive. There's also concern that the heavy hand of Chinese regulators could freeze the market at any time - a painful precedent set when Shanghai's market crashed last year. For now China's stock performance continues to lag far behind other major global players. And experts warn it could still be some time before the world's second largest economy finds its second wind.