Mainland Capital to Hong Kong Stocks: Hong Kong connect stock quotas increase by 4 times
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02:12
Beginning today, the daily trading quotas on the Chinese mainland's stock connects to the Hong Kong stock exchange have been raised to four times their original level. What does this mean for institutional and individual investors? Mi Jiayi has more.
Trading between Shanghai and Hong Kong is now capped at 52 billion RMB per day per direction, while trading between Shenzhen and Hong Kong is capped at 42 billion yuan per day. In fact, this is the second the time the stock regulators have eased their restriction on trading volumes. So what do people on the Shanghai street think? Will it change their investment options?
I'm interested in investing in Hong Kong stocks. The expansion of the quota will make that easier for me.
I think the increase in the quota will give me more investment options. Hong Kong stocks are more active than mainland ones, and sometimes they give you more opportunities.
Central bank governor Yi Gang told the Bo'ao Forum last month that China would be making many such changes to open its finance markets. Money flowing into the mainland stock markets through the Hong Kong connects came to more than 37 billion yuan in April, triple the amount in March. Predictions are that when the MSCI Emerging Markets index begins adding China's A-share in June, it will add billions of dollars to the value of mainland stocks. Domestic institutional investors also view the expansion of the quotas as a good thing.
YU JIANWEI FOUNDING PARTNER, ZEJU CAPITAL "Some estimates say foreign investment into the A-share markets after the expansion will come to one tenth of the total daily trading volume on the markets now, which means foreign money will have a strong influence on our market. Especially because they have professional institutional investors, they will set a good example for us. When we invest in overseas markets through the stock connects, our targets are blue-chips with relatively low valuations. The increase of the trading quota means it will be even more convenient for us to invest overseas from now on."
Analysts estimate the inclusion of A-Shares in the MSCI index could bring in between 18 and 20 billion more US dollars into the China markets.