As a bridge between Chinese mainland and international financial markets, the Stock Connect program allows investors on both sides to gain mutual access. By analyzing how cross-border flows respond to macro-related shocks, we show that compared with possibly homemade foreign investors, genuine foreign investors are more likely affected by the U.S. monetary shocks, the exchange rate risk, the U.S. market performance as well as the cross-market valuation disparity. The paper highlights the importance of profiling different groups of cross-border participants over market integration.

This significant and timely book explores a novel market mechanism, Stock Connect, which gives mutual market access to Chinese and international investors, and provides original analyses and fresh insights. This mechanism could become the new normal in future global financial integration. By examining this cross-border scheme from a regulatory perspective via a three-tiered analytical framework (investors, issuers and regulators), this book unearths the profound implications of Stock Connect to local and global financial markets and the legal impediments to its implementation. It covers a broad range of topics in this cross-boundary investment channel, including an overview of four existing connectivity arrangements (Shanghai-Hong Kong, Shenzhen-Hong Kong, Shanghai-London and China-Switzerland), the uniqueness of these connectivity arrangements, investor protection, regulations of connect issuers, regulatory cooperation and enforcement, the impacts on local and global financial markets, the implications for the world market connectivity as well as the challenges and future of Stock Connect. This pioneering study will appeal to a broad range of readers who are interested in the on-going reshaping of international financial systems and China's emerging influence in the international financial order.

The Stock Connect programs are important steps for China to liberate its relatively restricted financial market. The Shanghai - Hong Kong Stock Connect program launched in 2014, and the Shenzhen - Hong Kong program launched in 2016 allowed both institutional and individual international investors access to the Chinese stock market for the first time. This paper studies the impact of the Stock Connect programs on Chinese stock returns and Chinese stock market's integration with international stock markets using 2SLS regression analysis. Regression results show that the launch of the SH - HK Stock Connect program increased daily returns of all four eligible indexes under Stock Connect programs but did not increase correlation between daily performances of Chinese stock market and global stock markets with statistical significance.

China has been intensively launching opening-up policies since November 2014. Among these policies, the Shanghai-Hong Kong Stock Connect offers international investors an approach to investing directly in Mainland China stock markets. At the same time, Mainland China capital can gain access to overseas markets via Hong Kong. This study investigates the influence of the policy by using the Vector Autoregressive and Generalized Autoregressive Conditional Heteroscedastic framework. The results show that the new policy has different impacts on the Shanghai, Shenzhen, and Hong Kong stock markets due to their distinct market features and policy restrictions. The three markets also transmit the policy effects to one another due to their close linkages. It not only indicates that Mainland China financial centers (Shanghai and Shenzhen) integrate with one of international financial centers (Hong Kong), but also symbolizes the gradually increasing strength of Chinese policy effects on global capital markets.

PRIVATIZING CHINA INSIDE CHINA'S STOCK MARKETS In more depth than any other, this highly readable book lays bare why China's capital markets have fallen so far short of their promise. It is required reading for anyone seeking to understand the realities and the future of an extraordinary economic transformation. - James Kynge, Former Beijing Bureau Chief, Financial Times, Author, China Shakes the World Carl Walter and Fraser Howie bring together a wealth of experience to this complex and deeply important topic. Their book contains a mine of invaluable quantitative and qualitative information as well as an incredible depth of knowledge. It is essential reading for anyone investing in companies from mainland China. - Professor Peter Nolan, Judge Institute of Management Studies, University of Cambridge Privatizing China is essential for anyone who wants to understand China's companies and stock markets. no one should invest in China without reading it. - Arthur Kroeber, Managing Editor, China Economic Quarterly Carl Walter and Fraser Howie combine a deep knowledge of China and finance to provide an unflinching perspective on the country's effort to build functioning capital markets. China may have wowed the world with its high-speed economic growth and manufacturing prowess, but this book is compelling evidence that Beijing's mastery of the universe does not yet extend to the stock market. - Richard MacGregor, beijing Correspodent, FinancialTimes This book will answer many people's questions regarding SOEs and the stock market. I think it is destined to become the standard reference work on the subject. - Jean C. Oi, Director, Center for East Asian Studies, Stanford University

This significant and timely book explores a novel market mechanism, Stock Connect, which gives mutual market access to Chinese and international investors, and provides original analyses and fresh insights. This mechanism could become the new normal in future global financial integration. By examining this cross-border scheme from a regulatory perspective via a three-tiered analytical framework (investors, issuers and regulators), this book unearths the profound implications of Stock Connect to local and global financial markets and the legal impediments to its implementation. It covers a broad range of topics in this cross-boundary investment channel, including an overview of four existing connectivity arrangements (Shanghai-Hong Kong, Shenzhen-Hong Kong, Shanghai-London and China-Switzerland), the uniqueness of these connectivity arrangements, investor protection, regulations of connect issuers, regulatory cooperation and enforcement, the impacts on local and global financial markets, the implications for the world market connectivity as well as the challenges and future of Stock Connect. This pioneering study will appeal to a broad range of readers who are interested in the on-going reshaping of international financial systems and China's emerging influence in the international financial order.