SHANGHAI--The Shanghai-Hong Kong stock connect, which permits investors in each city to invest in the other's market, will allow short-selling from March 2, the Hong Kong Stock Exchange said in a statement.
Investors may only short-sell shares designated on the Shanghai-Hong Kong scheme, which launched in November in what was seen as a major opening of China's stock market, the Hong Kong Exchanges and Clearing Ltd. said in the statement published on its website, dated Feb. 18.
Read More New China stock connect to follow in old footsteps
Both the Shanghai and Hong Kong Stock Exchange halted trading late last week for the Lunar New Year holiday, with Shanghai to resume next Wednesday and Hong Kong on Monday.
The Hong Kong exchange said the short-selling ratio would be capped at 1 percent of an eligible stock on a specific trading day and, cumulatively, no more than 5 percent of such stocks over 10 consecutive days.
Analysts have said that permitting short-selling may help boost the lukewarm start of the connect, with demand having been subdued, due in part to trading restrictions.
Among other trade boosting steps, the Hong Kong exchange is considering expanding the number of Hong Kong stocks Chinese investors will be able to buy.