China and Britain will study linking the London and Shanghai stock markets, Britain's finance minister George Osborne said Monday despite weeks of plunging prices on the Asian exchange.
Chinese stock markets have been sometimes likened to "casinos" and the benchmark Shanghai Composite Index soared more than 150 percent in the 12 months to mid-June, in a debt-fuelled rally encouraged by authorities.
They have since plummeted around 40 percent as the bubble burst, despite efforts by Beijing to prop up prices, which have raised questions over its economic management and its commitment to market reforms.
But Osborne -- on a five-day trip to China to promote ties between Britain and the world's second-biggest economy -- said a "feasibility study" would be carried out on a possible link between the London and Shanghai exchanges.
"It's in our interests that we have deeper and more mature financial markets across the world," he said.
"I think London as the home to the deepest and maturest capital markets can play an important part in that."
A "stock connect" between the Shanghai and Hong Kong bourses was launched in November last year, enabling international investors to trade selected shares in Shanghai, while also allowing mainland investors to buy them in the former British colony.
Osborne also called for closer business and economic links with China.
"We should be doing more business with China, we should be better connected to the Chinese economy, our financial institutions should establish stronger links," he said.
"I think that will help China in this important reform and change it's undergoing," he added. "But I also think it's going to help Britain."
Chinese state media reported in June that the London Stock Exchange was considering forging a stock link with Shanghai, quoting Nicolas Bertrand, head of equity and derivative markets for the London Stock Exchange Group.