Landmark Hong Kong-Shanghai stock links opens amid high demand for Chinese stocks
17 Nov 2014
International buyers snapped up Chinese stocks today as an exchange link that allowed Hong Kong and Shanghai investors to trade shares on each other's bourses debuted, marking a major step towards opening China's tightly controlled capital markets, Reuters reported.
Under the Stock Connect scheme foreign and Chinese retail investors would get unprecedented access to the two exchanges, which, according to some analysts could eventually lead to the creation of the world's third largest stock exchange.
Shares in both Shanghai and Hong Kong opened around 1 per cent higher but quickly shed some gains, as Hong Kong markets fell into negative territory. The volume of "northbound" trade - investors with Hong Kong accounts buying mainland shares continued to be much higher than trade from mainland investors in the opposite direction.
According to Zheng Weigang, senior trader at Shanghai Securities, sentiment was cautious for now as increases in the run-up to the launch had accumulated profit-taking pressure and also because investors wanted to see whether the connect would lead funds to flow southward or northward.
He added, in the longer run, however, the connect would surely benefit both markets as China increasingly opened up to the outside world.
Most stocks in Shanghai Composite Index were up versus their Hong Kong counterparts as global investors met the daily limit for buying mainland equities, Bloomberg reported.
Kweichow Moutai Co and SAIC Motor Corp each advanced at least 1.8 per cent after the link opened. Daqin Railway Co vaulted 6.2 per cent after then shares were recommended by Goldman Sachs Group Inc and Standard.
Bloomberg quoted Dai Ming, a fund manager at Hengsheng Asset Management Co in Shanghai as saying by phone that it was a good start for the Shanghai connect.
He added, it looked like overseas investors favoured stocks without Hong Kong listings and those with high dividend yields'' such as SAIC.
