CHINA will introduce a program allowing mainland individuals to invest directly in Hong Kong equities in the second quarter of next year, HSBC Holdings Plc said yesterday.

Mainland investors will pour US$27 billion into Hong Kong stocks by the end of 2008, said Steven Sun, a Hong Kong-based HSBC analyst, in a report released yesterday.

There has been speculation about the timing of the plan after the government said on August 20 it would introduce a pilot program to allow nationals with a Bank of China account in Tianjin to buy Hong Kong equities.

The program won't be implemented until risk management measures are in place, Hong Kong Monetary Authority Chief Executive Joseph Yam said on Thursday. China's Premier Wen Jiabao said on November 3 the government needed more time to assess the risks to the stability of Hong Kong's financial system, according to Bloomberg News.

"Next year's second quarter sounds about right," said Gabriel Gondard, of Societe Generale venture Fortune SGAM Fund Management Co in Shanghai. "China's regulators have reached broad agreement, but many implementation issues like investment quotas need to be worked out."