From The Financial Times:
Hong Kong’s trains are among the most reliable in the world. Comments by Chinese premier Wen Jiabao , however, suggest that the so-called “through-train”, a mechanism to let the ocean of funds trapped in China by capital controls flow into and through Hong Kong, will be indefinitely delayed. It is a sharp demonstration of the risks of exposing Hong Kong’s market to the whims of China’s multifarious bureaucracy.
Chinese citizens are not allowed to invest their money abroad and, except when Chinese companies are listed on separate markets such as an overseas stock exchange, foreigners’ ability to buy shares in them is heavily restricted. One bizarre result is that shares in Shanghai – accessible to Chinese savers with few other options – can trade at a vast premium to shares of the same company listed in Hong Kong. [Full Text]