Photographer: Jerome Favre / Bloomberg
Photographer: Jerome Favre / Bloomberg
Hong Kong’s stock market traders are on the verge of discovering if the $ 7.3 trillion market can hold its own without its greatest source of flows.
As of Tuesday, trading connections through the Hong Kong exchange operator, allowing traders on the mainland to buy domestic shares, will be discontinued until 17 February because of the Lunar New Year holiday. The stock connects closure Will brake on record levels of inflows that helped Hong Kong’s stock market get its best start a year ago 1985.
Investors north of the border became bargain hunters in late 2020 after valuations in some sectors on land reached the highest level in more than a decade. Mainland investors bought nearly $ 48 billion net worth of Hong Kong stock in the first five weeks of this year, which is already more than half of the 2020 total. They continued to buy the city’s stock on Monday. with net purchases of HK $ 3 billion ($ 385 million) as of 10:33 a.m. local time.
“We think it may be worth making some profit ahead of the trading link ending for stocks strongly stimulated by southern investors,” including Tencent Holdings Ltd., Meituan and China Merchants Bank Co Ltd, said Zhuang Jiapeng, a fund manager at Shenzhen JM Capital Co.
Still, the incentive to withdraw money from the market is low, as people who swap investment ideas over the holidays can bring even more profit when ties with Shenzhen and Shanghai reopen. Zhuang said he is considering moving all of his fund’s assets to Hong Kong later this year, compared to his current 70% exposure.
While the closing of the connections for the Lunar New Year is an annual event, traders are taking a closer look at this year’s unprecedented inflows. Tencent, for example, has looked to the south revenue through the links account for about 42% of the average stock per day revenue so far this year, according to data collected by Bloomberg.
Investors say longer-term exposure to Hong Kong is attractive given the number of mutual funds piling up in the city’s assets. The financial center is the venue for an increasing number of popular startup offerings and tech giants, including the short video platform Kuaishou Technology, which debuted on Friday. Tencent Music Entertainment Group has selected banks to arrange the plans second entry in town.
“Hong Kong stocks will remain attractive to mainland, while A-share outperformers have skyrocketed and valuations are insane,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. trend for Hong Kong stocks. “
– Assisted by John Liu, April Ma and Jeanny Yu
(Updates market capitalization in Section 1, adds flows south for Monday in Section 3)