Donald Tsang, Hong Kong’s chief executive, has endorsed proposals to begin trading Hong Kong and Shanghai-listed shares on each other’s exchanges, and confirmed that talks are under way.

“There’s no reason why...stocks listed in Shanghai cannot through some financial instruments be traded in Hong Kong,” Mr Tsang said in an interview with the Financial Times. “Similarly, I do not see why Hong Kong stocks cannot be co-listed in the Shanghai stock market through an arbitrage arrangements...We are discussing the mechanics of it.”