by JEFF PAO
Russia’s Saint Petersburg Stock Exchange has announced it will allow the trading of 12 Hong Kong stocks from Monday, June 20, raising concerns that Russians may use Hong Kong to evade western sanctions. It remains unclear how the proposed cross-border stock trading can be done without the SWIFT.
According to the SPB Exchange’s 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 that the number of the 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 next year.
Mankevich Vitaly Vikentievich, President of the Russian-Asian Union of Industrialists and Entrepreneurs (RASPP), was quoted in the Friday Sputniknews report as saying that Russian people could diversify their investments by trading Hong Kong stocks.
A stock trading department head of Russia’s Alfa Group told Sputniknews that Russians would increase their investments in Chinese assets, particularly Hong Kong’s information technology sector, due to the rising risks of having their foreign assets frozen by the West amid the unstable geopolitics. He said some Russians would convert their euros and US dollars into renminbi.
Currently, the SPB Exchange allows brokers to trade 17 foreign-listed stocks, mostly US-listed companies, such as Citibank, the Bank of New York Mellon and Lumen Technologies. A statement titled“SPB Exchange is operating normally” has stayed on top of the bourse’s website since late April but it is unclear how it can trade foreign stocks without the SWIFT.
Herman Gref, chairman of Sberbank, said Friday during the St. Petersburg International Economic Forum that Sberbank stopped clearing its cross-border contract payment service in the Chinese currency from June 7 but the service had already been resumed.
Meanwhile, the Hong Kong stock exchange said it had not formed any partnership with the SPB Exchange. It said on Friday that it believed that the scheme was part of the global issuer promotion program rolled out by the SPB Exchange.
Last August, Joseph Yam, an Executive Council member and the former chief executive of the Hong Kong Monetary Authority, said Hong Kong had a role to help connect the financial markets of the mainland and foreign countries. He suggested that investors should be allowed to buy Hong Kong stocks in renminbi and sell them in Hong Kong’s 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 emergency plans in case Hong Kong or mainland China eventually is sanctioned by the US.
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