China halts listings between Shanghai, London due to tensions: Sources

Chinahas temporarily blocked planned cross-border listings between the Shanghai and Londonstockexchanges because ofpoliticaltensionswith Britain.

Suspending the Shanghai-LondonStockConnect scheme casts a shadowoverthe future of a project meant to build ties between Britain andChina, help Chinese firms expand their investor base and give mainland investors access to UK-listed companies.

The sources, who include public officials and people working on potential Shanghai-London deals, all said that politics was behind the suspension.

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Two of them highlighted Britain's stanceoverthe Hong Kong protests and one pointed to remarksoverthe detention of a now former staff member at its consulate in Hong Kong.

All five sources have been involved in talks with Chinese officials and spokeon condition of anonymity because they are not authorised to speak about the matter publicly.

Britishcompanies and banks involved in the scheme are watching closely how recently-elected Prime Minister Boris Johnson approaches relations with Beijing and what stance he takes on Hong Kong, which has been roiled by protests.

Chinablames the Hong Kong unrest, heavily supported by an anti-government movement seeking to curb controls by Beijing, on interference by foreign governments including the United States and Britain.

TheChinaSecurities Regulatory Commission and the ShanghaiStockExchange did not respond to requests for comment. A spokesperson for the LondonStockExchange and a spokeswoman for the UK's finance ministry declined to comment.

China's Ministry of Foreign Affairs said in a faxed statement that it is not aware of the specifics, but added that it "hopes the UK can provide a fair and unbiased business environment for Chinese companies that invest in the UK and create the appropriate conditions for both countries to carry out practical cooperation smoothly in various fields".

StockConnect, which began operating last year, was devised as a way of improving Britain's relationship with the world's second-biggest economy and was seen as a major step byChinato open up its capital markets as well aslinking them globally.

Huatai Securities was the first Chinese company to use the scheme in May, with SDIC Power set to become the second in December with a listing of global depository receipts (GDRs) in London representing 10 per centof its share capital.

However, the alternative energy operator's deal was postponed at an advanced stage, with SDIC Power citing market conditions as the main reason.

Five sources told media SDIC Power's deal was halted because of Beijing's suspension ofStockConnect.

Other hopefuls such asChinaPacific Insurance, which one of the sources said could have launched a deal as early as the first quarter of 2020, have also been told to put their cross-border listing plans on ice, they added.

SDIC Power andChinaPacific Insurance did not respond to requests for comment.

"It's not only a big blow to the companies looking to broaden the investor base via listings in London, but also toChina'slinks with global markets," one source, who has worked on one of the GDR deals.

Trouble with the scheme comes at a bad time for Britain, which is keen to build ties with non-European Union countries as it prepares to leave the bloc, and the LSE.

The London exchange was set for its worst year in terms of new listings in a decade as of December4, Refinitiv data showed, withpoliticalvolatility and concernsoverBritain's EU divorce crimpingstockmarket fundraisings.