Date
18 October 2017
A file picture shows Chinese Premier Li Keqiang announcing the launch of the Shanghai-Hong Kong stock link in November 2014. Credit: AFP
A file picture shows Chinese Premier Li Keqiang announcing the launch of the Shanghai-Hong Kong stock link in November 2014. Credit: AFP

Mainland capital flow may trigger HK small-cap revaluation

Capital flow from China has gradually altered the dynamics of the Hong Kong stock market.

Since mutual market access began, cumulative net purchase of Hong Kong-listed shares by mainland investors has surpassed HK$500 billion in value.

In March, several companies newly eligible for the stock link program immediately drew strong buying interest from mainland investors.

When penny stocks took a plunge in June, mainland investors reportedly snapped up shares in more than 10 companies.

From these incidents, it’s not hard to notice that Chinese money is having bigger influence on Hong Kong equities.

That is why tracking what the mainland investors prefer and buying what they like can be a good strategy.

For instance, deep-pocketed mainland investors with long-term perspective have been seeking stocks that stand to gain from the Belt and Road initiative.

Some, meanwhile, tend to favor small-caps. Given this, one needn’t be surprised if such stocks enjoy better valuations in Hong Kong going forward.

The full article appeared in the Hong Kong Economic Journal on Sept 18

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RC

Senior investment banker

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