Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
Hong Kong stock traders are on the verge of finding out if the $ 7.3 billion market can hold its own without its biggest source of flow.
As of Tuesday, trading links will stop via the Hong Kong Stock Exchange operator, which allows mainland traders to buy domestic shares until February 17 due to the lunar New Year holiday. The stock connects closure will lower the brakes on record inflows that have helped Hong Kong’s stock market get off to the best start in a year 1985.
Investors north of the border did bargain hunters after valuations in some 2020 sectors on land have reached the highest in more than a decade. Continental investors bought nearly $ 48 billion worth of shares in Hong Kong in the first five weeks of this year, which is already more than half of 2020’s total. They continued to buy shares in the city on Monday, with net purchases at HK $ 3 billion ($ 385 million) from 10:33 local time.
“We think it may be worthwhile to make a profit before halting the trading link for stocks that are strongly strengthened by southern investors,” including Tencent Holdings Ltd., Meituan en China Merchants Bank Co. Ltd., says Zhuang Jiapeng, a fund manager of Shenzhen JM Capital Co., Ltd.
The incentive to take money out of the market is still small, as people exchanging investment ideas during the holidays may incite further profits when ties with Shenzhen and Shanghai reopen. Zhuang said he was considering moving all of his fund’s assets to Hong Kong later this year, compared to his current 70% exposure.
While closing the links for the Moon New Year is an annual phenomenon, traders are looking closer, given the unprecedented inflow of this year. Tencent, for example, looked south turnover this is about 42% of the stock’s average per day turnover so far this year, according to data compiled by Bloomberg.
Investors believe the long-term exposure to Hong Kong is attractive as the number of mutual funds accumulates in the city’s assets. The financial hub is home to an increasing number of complete startup lists and technology giants, including the Kuaishou Technology short video platform, which debuted on Friday. Tencent Music Entertainment Group has selected banks to arrange their planned second listing in the city.
“Hong Kong equities will remain attractive to continents while the better performance in A-shares has soared and valuations are insane,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. “We are just beginning a long-term buying trend for Hong Kong stocks.”
– With the help of John Liu, April Ma and Jeanny Yu
(Update the market capitalization in paragraph 1, add southbound flow for Monday in paragraph 3)