Hong Kong Stock Exchange, we have a problem

Yes, HKSE or rather Hong Kong has a problem and may be a crisis. According to the Sino-US Strategic Economic Dialogue talks, China will allow foreign companies to sell CNY-denominated shares inside China and that means multinational companies like HSBC, Coca-Cola and Siemens may list shares in Shanghai. It also means that foreign companies need not come to Hong Kong to do IPOs. The stock markets in Shanghai and Shenzhen will be open and they can raise lots of money from an economy that is bursting with capital and a reserve of over 1.5 trillion usd. Consider some of the implications:

• More and more Chinese companies are seeking listings in Shanghai and not Hong Kong. Perhaps, the best you may get in the future would be a dual listing of "A shares" in Shanghai and "H shares" in Hong Kong. But since "A shares" have been outperforming "H shares", it is doubtful whether such dual listing should be necessary or desirable.
• The performance of recent listings of foreign companies or businesses in Hong Kong are far from satisfactory. Prices of shares of companies like Samling (3938) and Sino-Gold have disappointed many investors here. Does this mean that foreign companies are not sincerely welcome in our market? If you are aware, shares of some Nasdaq companies such as Intel and Microsoft have been (indirectly) listed in Hong Kong but they have encountered basic difficulties such as liquidity! Tell me who would really like to list foreign companies or businesses in Hong Kong when they could go somewhere else like Shanghai?
• If HSBC is listed in Shanghai, I am afraid many investors in Hong Kong will turn to buy the shares in Shanghai. Of course, under the present system, people in Hong Kong and foreigners cannot buy "A shares" in China but such restriction may or should too be removed when HSBC is allowed to list shares in Shanghai. Think about what will happen to the local stock market when we exchange the Hong Kong shares of HSBC for its shares listed in Shanghai?
• The HK Stock Casino will have an endless nightmare when the Chinese Yuan becomes freely convertible and/or foreigners or HK investors can buy A shares. If that happens, who will still buy shares in Hong Kong? A number of traditional blue chips (e.g. HSBC, BEA, CK, SHK, etc.) have already expressed their intent to list shares in the Mainland and when they have done that, why should you continue to buy their shares in Hong Kong? The stock markets in Shanghai and Shenzhen will surely have a wider shareholders' base, greater demands, higher liquidity and stock prices as the "A shares" have been doing will undoubtedly outperform shares listed in Hong Kong.
• I may be wrong but I have no doubt: The Hong Kong Stock Casino and its monopoly may only continue to prosper based on the following conditions:

1. The Chinese Yuan will not be freely convertible;
2. No foreigners or Hong Kong investors may buy "A shares" in Shanghai or Shenzhen; and
3. No foreign companies may list shares in Shanghai or Shenzhen.

Condition no.3 is already out under the Sino-US Dialogue. Hey, our dear HK Stock Casino, you already have a problem if not a crisis. If any individual investor is still holding shares in the Hong Kong Stock Exchange (just to remind you, the Hong Kong Government is holding more than 5%), should he or she seriously think about when to sell?