22nd September 2015
The Chancellor has revealed that the UK and Chinese governments are considering plans to link their stock markets.
Speaking at the Shanghai Stock Exchange, George Osborne said the countries should unite through tough times.
Osborne congratulated China on its growth since the financial crisis: “Shanghai also tells a story of an even more recent period of our economic history – the recovery from the Great Recession of 2008 to 2009 […]
“Back in 2010 the Chinese economy was one of the very few bright spots in the world economy, and the UK was in the grip of economic crisis.
“A third of all global growth came from China, and the Chinese economy was to go on expanding by $4 trillion in just 4 years.
“The global economy was like a damaged aeroplane, flying with one engine, China’s engine. The world needed China.”
He said that since then the British economy had turned itself around and acknowledged recent turmoil in the markets sparked by China’s downturn, but said the country was still vital to “power our economy forward”.
He said: “I very deliberately chose to come here, to the Shanghai Stock Exchange, to the epicentre of the volatility in financial markets this summer, to say this:
“Whatever the headlines, regardless of the challenges, we shouldn’t be running away from China.
And my message is clear:
Through the ups and downs, let’s stick together.”
Osborne said the country was adjusting to a “new normal”, which would inevitably mean a path of slower growth, but he said: “If China continues to grow as the IMF forecasts it would mean going from GDP of $11 trillion this year to a GDP around $16 trillion in just 5 years.
“That would add an economy larger than Germany’s or Japan’s to world GDP.”
On the plans under consideration to launch a joint stock exchange, he added: “So I want to see our stock markets in London and Shanghai formally connected, with UK firms raising funds from Chinese savers, and Chinese firms listing in London.”
Ian Forrest, investment research analyst at The Share Centre, welcomed the news as a positive for investors.
He says: “The intention would be to enable investors in both countries to trade more easily in their respective shares. We believe this would be great news for British investors as it would give them direct access to the growing Chinese market. Despite recent events, the vast Chinese economy is likely to keep growing steadily for the foreseeable future.
“The move would also benefit UK companies as the growing number of Chinese investors would have easier access and be able trade in their shares. Given the 300-year history of the London Stock Exchange the link would enable the Chinese to tap the significant store of knowledge and experience built up by the operators of the British market. A win-win all round in our opinion.”