Feb. 22, 2007 (China Knowledge) - Hong Kong Exchanges and Clearing chief executive Paul Chow Man-yiu said that the proposal by a leading Mainland official to create an A- and H-share arbitrage platform is not possible, citing that widespread cross-border stock trading is not feasible as long as the RMB is not fully convertible, reported South China Morning Post.

According to the report, Chow believes that although the qualified domestic institutional investors (QDII) and qualified foreign institutional investors (QFII) schemes allow both the Mainland and Hong Kong to exchange capital, the size of the capital is still very small to the whole market values for both Hong Kong and China markets.

Fang Xinghai, deputy director of the Shanghai government's financial services office, had proposed last week the setting up of a platform that will allow investors on both sides of the border to trade shares in the 38 companies listed dually in Shanghai and Hong Kong. Fang believes that an expanded version of the QDII and QFII mechanisms could be the foundation for such a system.

The benchmark Hang Seng Index jumped 83.51 points, or 0.41%, to close at 20,651.42 yesterday, while the Hang Seng China Enterprises Index, which tracks the so-called H shares of 37 mainland companies, rose 38.73 points or 0.39% to 9,996.49.