Photographer: Jerome Favre / Bloomberg
Photographer: Jerome Favre / Bloomberg
Hong Kong stock traders are about to find out if the $ 7.1 trillion market can be maintained without the largest source of flows.
As of Tuesday, trading links through the Hong Kong trader that allow mainland traders to buy domestic shares will stop. until February 17 due to the Lunar New Year celebration. The stock connects close will put the brakes on record entry levels that helped propel the Hong Kong stock market to its best start in a year since 1985.
Investors north of the border turned bargain hunters at the end of 2020, after valuations into some the land sectors have reached their highest level in more than a decade. Continental investors bought a total of nearly $ 48 billion worth of Hong Kong shares in the first five weeks of this year, which is already more than half of the 2020 total.
“We believe it may be useful to take some profit before stopping the trading link for stocks that are strongly stimulated by investors from the south,” including Tencent Holdings Ltd., Meituan and China Merchants Bank Co. Ltd, said Zhuang Jiapeng, fund manager at Shenzhen JM Capital Co.
However, the incentive to withdraw money from the market is low, given that people who exchange investment ideas during the holidays could boost additional earnings when ties with Shenzhen and Shanghai reopen. Zhuang said he plans to move all of his fund’s assets to Hong Kong at some point later this year, compared to its current 70% exposure.
While closing the links for the Lunar New Year is an annual occurrence, traders are taking a closer look, given this year’s unprecedented entries. Tencent, for example, looked south Fiscal value through links represents about 42% of the daily average of the stock Fiscal value so far this year, according to data compiled by Bloomberg.
Investors say the long-term exposure to Hong Kong is attractive, given the number of mutual funds that accumulate in the city’s assets. The financial center is home to a growing number of hot start listings and technology giants, including the Kuaishou Technology short video platform, which started on Friday. Tencent Music Entertainment Group has selected banks to arrange their plans the second list in the city.
“Shares in Hong Kong will remain attractive to the mainland, while A-shareholders have risen and stocks are crazy,” said Dai Ming, fund manager at Hengsheng Asset Management Co. “We are still at the beginning of a long-term acquisition of the trend in Hong Kong stocks. ”
– With the assistance of John Liu, April Ma and Jeanny Yu