Therefore, Mr Chow's comments should not be seen as a wet blanket, but rather a subtle reminder that private sector interests must be taken into full consideration in formulating any stock market link to serve investors and financial intermediaries. The private sector is in a better position than government officials in designing a workable channel that could create trading opportunities that would, in turn, help eradicate some of the existing market anomalies.

Indeed, success of the proposed market channel rests on the scale of trading opportunities at acceptable risk.

In the present regulatory environment, it can be envisioned that a market channel would most likely be highly controlled. But the amount of capital allowed to flow through such a channel would inevitably determine its effectiveness as a link.

Striking an acceptable balance between macro-economic considerations and market requirements can only be achieved through close cooperation between the authorities of the two jurisdictions and private sector operators in Hong Kong and on the mainland. To give the undertaking greater momentum, it may be advisable for the Hong Kong Monetary Authority to take the initiative by reaching out to the investment and stock broker community by creating a working committee to lay the groundwork for the market channel.

As Mr Yam has conceded, the task is complicated. But the potential benefits a market channel can bring to the nation are undeniably worth the efforts by all parties involved.

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