China to lift Hong Kong restriction
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China said today that it would let citizens invest directly in the Hong Kong stock market, a move that will broaden options for savings-rich Chinese and help Beijing offset massive capital inflows from its trade surplus and foreign investments.
The news added more fuel to Hong Kong and Shanghai stock markets, extending a rally triggered by the Federal Reserve’s cut Friday in a key lending rate.
China has long restricted capital outflows, but with foreign reserves of more than $1.3 trillion, officials have begun to loosen barriers.
“Many will see this as a green light to take advantage of cheaper valuations on offer for Chinese shares listed in Hong Kong,” said Jing Ulrich, chairman of China equities at JPMorgan Chase & Co.
The Hang Seng index rose as much as 3.2% in trading this morning.
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