China's stockmarket is among the world's least accessible to foreigners, but a new tunnel through its capital-control barriers opened yesterday

China's stockmarket is among the world's least accessible to foreigners, but a new tunnel through its capital-control barriers opened yesterday. A much-anticipated link between the Shanghai and Hong Kong exchanges lets anyone with a Hong Kong brokerage account invest in the $2.6 trillion Shanghai stockmarket. Previously only a few approved institutions could buy Chinese equities. Expecting big inflows, long-sluggish Chinese shares have rallied nearly 20% since the plans were announced in April; the valuation gap with Hong Kong shares has disappeared. Investors will still face strict limits: China will cap net inbound investment at 300 billion yuan ($49 billion), just 2% of total market value. Brokers think that ceiling will eventually be raised, provided there are no serious hiccups. China was never going to abolish its capital controls in one go; the stock-exchange link is a big, albeit controlled, experiment in relaxing them.