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HONG KONG (AP) — China's approval of a long-awaited initiative to link stock exchanges in Hong Kong and the mainland city of Shenzhen, allowing foreign investors wider leeway to invest in Chinese shares, got a muted reception on Wednesday. China's Cabinet announced late Tuesday that preparations to connect Hong Kong and Shenzhen are "basically completed." Charles Li, CEO of Hong Kong Exchanges and Clearing, the city's stock market operator said the link would likely launched by Christmas. Li said that while awaiting the announcement of a launch date by regulators, the stock exchange would conduct technical preparations and testing, update regulations and raise investor awareness. The Shenzhen Composite index rose modestly on Wednesday, gaining 0.3 percent to 2,041.82, while the Shanghai Composite fell 0.2 percent to 3,103.02. Hong Kong's Hang Seng index added 0.2 percent to 22,957.78. Hong Kong is Chinese territory but its financial system is open to foreign investors, while mainland markets are largely sealed off from global capital flows. Beijing has long used the former British colony as an offshore outpost for financial interaction with foreign companies and investors. A similar measure linking Hong Kong with the mainland's main exchange in Shanghai was launched in 2014. It allows investors from both cities to buy a limited range of stocks from the other side. Combined, the two mainland stock exchanges have a market capitalization of $7.4 trillion, second in the world after the NYSE Euronext. Mainland investors appeared unenthused, preferring to use other ways to invest abroad. But the Shanghai-Hong Kong link has proven hugely popular with foreign investors, who bought the maximum number of shares allowed in its first few days. Average annual turnover in Shanghai rocketed to 133.1 trillion yuan ($20 trillion) in 2015 from 37.7 trillion yuan ($5.7 trillion) in 2014, according to data on the exchange's website. "Based on the success of the Shanghai-Hong Kong link, the launch of the Shenzhen-Hong Kong link marks a concrete step toward making Chinese capital markets more law-based, market-oriented and globalized," Premier Li Keqiang, the country's top economic official, said in the statement. The premier said the move will increase China's international economic links while shoring up Hong Kong's position as a financial center. Until the launch of the Shanghai-Hong Kong link, only a few foreign institutions were allowed to buy mainland-traded shares in a closely regulated system. Mainland stock prices soared beginning in late 2014 and then collapsed in mid-2015, triggering a panicked, multi-billion-dollar government share-buying effort to stabilize prices. Li, the CEO of Hong Kong Exchanges and Clearing, dismissed fears Hong Kong's trading systems would be unable to handle the volatility if there's a repeat of the market meltdown across the border, saying it's no reason to delay the launch. "Crises happen all the time," he said. Markets "have been selling off, they have been going up. I don't really see why that's going to be a determining factor at this point, but again, we're talking about the future. Anything could happen in the future." The Shenzhen market is smaller than Shanghai's and many of its listed shares are in smaller technology and consumer-oriented companies. The city, which borders Hong Kong, led China's export boom that began in the 1980s. Under the new link, Hong Kong investors will be able to trade 880 stocks on the Shenzhen market, although 200 of those shares on the Nasdaq-style tech-heavy Chinext board will only be open to institutional professional investors at first. Mainland investors will be able to trade 417 Hong Kong small cap stocks through the Shenzhen exchange. There will be a daily quota limiting the maximum value of cross-border trades, similar to one in place with the Shanghai-Hong Kong link aimed at limiting volatility. Another broader trading quota will be dropped for both trading links. ___ McDonald reported from Beijing.

China approves new mainland stock link to Hong Kong