Mainland investors snapped up Hong Kong-listed Chinese stocks under the stock connect scheme in Shanghai, sending the Hang Seng Index to a seven-year high on Wednesday, as they looked for potentially lucrative “shadow A shares” across the border.
The huge bets on certain H shares bolstered the southbound transaction volume through the cross-border stock trading link, and drove the premium on the renminbi exchange rate in the grey market even higher, the Hong Kong Economic Journal reported.
The concept of “Hong Kong A shares” circulated widely on mainland social media, prompting mainland investors to park their cash in certain types of Chinese stocks listed in the city, the report said.
Investors showed preference for dual-listed stocks with low to medium-range pricing.
In a note, a GF Securities Co. Ltd. analyst recommended Linekong Interactive Co. Ltd. (08267.HK), GOME Electrical Appliances Holding Ltd. (00493.HK), Wisdom Holdings Group (01661.HK), Kingdee International Software Group Co. Ltd. (00268.HK) and CIMC Enric Holdings Ltd. (03899.HK), among other stocks.
The brokerage described opportunities presented by such “Hong Kong A shares” as a feast.
The surge in trading volume came after the China Securities Regulatory Commission loosened restrictions on eligible players for the Shanghai-Hong Kong Stock Connect program late last month.
Mutual funds with no quotas under the Qualified Domestic Institutional Investor scheme are now allowed to invest in Hong Kong shares via the stock connect link.
Trading volume at the Hong Kong stock market reached an all-time high of over HK$250 billion, while southbound turnover hit a record HK$20.95 billion.
As of 8 p.m. on Wednesday, the renminbi exchange rate to a dollar was at 6.315 in the grey market, about 1.7 percent higher than the Hong Kong rate of 6.2068, the report said.
This article appeared in the Hong Kong Economic Journal on April 9.
Translation by Vey Wong
[Chinese version 中文版]
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