London working on stock-trading alliance with Shanghai bourse

The London Stock Exchange has expressed an interest in creating a stock-trading link with the Shanghai Stock Exchange, similar to the one between Shanghai and Hong Kong, to tap into opportunities as China's capital markets continue to open up.

"We are working on it and trying to understand what might be involved," Nicolas Bertrand, head of equity and derivative markets of the London Stock Exchange Group, told a press briefing in Beijing.

Bertrand, who declined to offer a timetable for any launch, said the arrangement could add more complexity to the British bourse's operations, but that it was in talks with regulators, clients, and assets firms to ensure a potential stock-connect program could meet the relevant regulatory requirements and conditions.

Officials at the LSE also said they are working hard at attracting more Chinese companies to list on the bourse, despite high valuations in the Chinese equities market encouraging many overseas-listed Chinese companies to seek a return to home turf.

Jon Edwards, its deputy head of primary markets and emerging markets, said the British exchange certainly sees opportunities for Chinese companies listing their overseas assets in London, under the government's "Belt and Road Initiative", which aims at reviving the ancient Silk Road trading routes.

Edwards said LSE had been receiving a steady stream of enquiries from listed Chinese companies in the oil, gas and commodities sectors, particularly, on being dual-listed in London and another exchange.

Last year, seven Chinese companies listed on the London Stock Exchange's Alternative Investment Market, which is designed for smaller growing companies, with an average market capitalization of $94.2 million, according to LSE figures.

There are currently 61 Chinese companies listed in London. Since 2004, Chinese companies have raised more than $2.9 billion from the market.

To take advantage of London's status as the largest yuan market outside the Chinese mainland and Hong Kong, the bourse is also aiming to launch more yuan-denominated trading products.

There are 32 yuan-denominated bonds, also known as dim-sum bonds, worth $35.9 billion currently traded in London.

Five exchange-traded funds that track Chinese A shares have also been launched and more are expected to offer investors greater exposure to the booming Chinese stock market.