BEIJING, Aug. 23 -- Shenzhen residents will in two weeks be able to open an account at the local branch of the Bank of China (BOC) to invest in Hong Kong securities, Chinese-language media said yesterday.

The new move, announced by the BOC on Tuesday, allows its branches in more than 10 major cities to provide the service to local residents in two weeks’time.

The announcement came a day after the State Administration of Foreign Exchange (SAFE) designated Tianjin as the only mainland city where investors can open an account to invest directly in the Hong Kong stock market. BOC branches in 10 cities will act as agents for the Tianjin branch.

However, the facility is not available in Tianjin at present, although the SAFE said it would be offered “very soon.”

“The pilot scheme is expected to be operational soon, maybe in two weeks, and the SAFE didn’t give the exact date,” an official with the BOC’s Shenzhen Branch was quoted by the Shenzhen Economic Daily as saying yesterday.

The minimum investment amount has been set at 100,000 yuan (US$13,158), he said.

The Shenzhen branch is now working on details such as application procedures and charges, which need the approval of the SAFE. Soon after the initiation of the pilot program in Tianjin, the Shenzhen branch will start accepting applications, according to the official.

At present, individuals are allowed to invest overseas only through banks, brokerages, insurers and fund managers licensed under the Qualified Domestic Institutional Investor program.

“It is absolutely good news for Shenzhen residents because we don’t need to go to Tianjin or Hong Kong to open our accounts, that will reduce our cost and save our time to open an account,” a resident surnamed Zhang said to .

“Though we don’t need to open accounts to Tianjin in person, I still think the procedures for transactions are still too complicated,” said Zhang.

According to the bank official, while residents can purchase and sell stocks through accounts managed by the Tianjin BOC outlets, the flow of funds will take longer because money transfer between banks takes time.

“The new program will provide an alternative for Shenzhen individuals to invest overseas securities, but will not cause a big fund flow or a rush for account openings because investors need time to get to know the Hong Kong security market, which is quite different from Shenzhen and Shanghai in mechanism, fund flow and management,” Zhang Jie, an analyst with China Merchants Bank Securities Co., told the Shenzhen Economic Daily.

Under the pilot project in Tianjin, investors will be limited to the Hong Kong market, the SAFE said.

Current rules limiting the purchase of foreign exchange by individuals to US$50,000 a year will be waived for the pilot. Investors will be able to convert an unlimited amount of yuan into foreign currency and invest it in Hong Kong.

Investors must open an account with Bank of China’s Tianjin branch and with Bank of China International Securities in Hong Kong to buy Hong Kong shares.

(Source: Shenzhen Daily)