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Stock link sees weak uptake from investors
Print Edition
INVESTORS largely ignored the linkup between the Shanghai and Hong Kong stock exchanges yesterday, a day after it launched to much fanfare and hopes of billions of dollars in daily cross-border transactions.
Officials have trumpeted the Shanghai-Hong Kong Stock Connect as opening up the Chinese mainland’s stock market to the outside world and offering mainlanders entry to the Hong Kong exchange.
But the second day of trading proved a damp squib, with mainland investors buying 7.6 percent of their daily allowance of Hong Kong shares, while Hong Kong dealers picked up less than a third of their Shanghai quota.
The launch day was also disappointing. While Hong Kong investors had exhausted their daily allowance of Shanghai shares two hours before the end of trade, mainlanders used up under 20 percent of their quota by the close.
The weak uptake was reflected in the two stock markets, which were hit by another batch of downbeat housing data out of China that indicates continued weakness in the world’s No. 2 economy. Hong Kong ended 1.13 percent lower, while Shanghai lost 0.71 percent.
“One would expect trading volumes to be the highest at the beginning and have daily trading limits hit extensively,” Credit Suisse said, according to Dow Jones Newswires. “While we do expect participants to increase materially over time, southbound volumes were disappointing.”
Shares in Hong Kong Exchanges & Clearing fell 2.36 percent to HK$173.90 (US$22.43) yesterday after losing 4.45 percent on Monday.
Sun Jianbo, Beijing-based chief strategist of China Galaxy Securities, said he was not surprised by the weak uptake from mainland traders.
“Those who were interested in the Hong Kong market placed their money there long ago through other channels,” he said.
“There’s no need for them to retrieve their money and reinvest through the Shanghai-Hong Kong Stock Connect. As for those who can’t afford to invest in the Hong Kong market, they don’t know much about the market anyway.”
He said the link “will enhance Hong Kong’s status as a window for international capital to enter China, it’s not playing any significant role in channeling Chinese funds out.”
The creation of the trading platform is a key step to liberalizing the world’s second-largest economy.
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