BEIJING, Jan. 29 (Xinhua) -- Southbound fund inflow under the Stock Connect program between the Chinese mainland and Hong Kong Special Administrative Region (HKSAR) remained unaffected in spite of the notable declines of the benchmark Hang Seng Index (HSI) early this week, reported Xinhua Finance Friday.
In the past three trading days by Thursday, the HSI, the most widely quoted indicator of the performance of the Hong Kong stock market, dropped about 5.3 percent in total and the Hang Seng TECH Index, which represents the 30 largest technology companies listed in Hong Kong, plunged 8.17 percent.
Contrary to the retreatment of the Hong Kong stock market, southbound fund inflows into the Hong Kong equity market did not suspend at all.
Yan Zhaojun, analyst with Zhongtai Financial International Limited noted that this bout of rally of the Hong Kong stocks was mainly driven by the pulse-like southbound fund influx under the Stock Connect program and after the stock prices underwent a reasonable upward revision or a relatively large upward revision, the long-short game in a more intensive extent appeared.
Yan attributed the drastic pullback of Hong Kong stock market to the downward revision pressure after feverish short-term overbuying, the return of capital flows back to U.S. dollar-denominated assets and the improved valuation advantage of A-share stocks after capital costs rose and A-share market retreated.
In the past days of this week by Thursday, southbound trading under the Stock Connect program contributed 66.951 billion Hong Kong dollars of net buying on the Hong Kong stock market.
In the past days of January ending Thursday, net southbound fund inflows into the Hong Kong equity market amounted to 298.2 billion Hong Kong dollars, showed statistics.
Wang Jiahui, operational director with overseas and portfolio investment department of Tebon Fund held that the Hong Kong stocks bought by southbound fund were relatively concentrated and featured two types, stocks of leading growth-stage enterprises such as Tencent (00700.HK), and Hong Kong Exchanges and Clearing Limited (00388.HK), and stocks of traditional industry leading firms. From Tuesday to Thursday, these stocks edged down about 10 percent after having gained earlier in January more than 30 percent from the start of this year.
Under such circumstances, however, the long-term influx trend of southbound trading into the Hong Kong stock market is expected to continue in light of the potential investment by insurers, private equity funds and other institutional investors, according to analysts with China International Capital Corporation, saying that the southbound fund inflows may stay between 500 billion yuan to 600 billion yuan in the following years. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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