Hong Kong: A tidal wave of mainland Chinese money is flooding into Hong Kong’s stock exchange sparked by Chinese mutual funds pouring cash into companies listed here.
The unprecedented amount of money flowing into the Hong Kong stock exchange is expected to continue this week, with authorities raising the bar on the daily limit allowed to flow in.
It’s part of a broad plan to link China’s exchanges together into a single trading powerhouse made up of Shanghai, Hong Kong and Shenzhen – also known as stock connect.
Authorities say Hong Kong is now the world’s largest exchange when measured by market capitalization.
Investors snapping up shares in major western firms like HSBC but even more shares in Chinese giants like China Mobile.
Last week the turnover soared – sparking a new-jaw dropping rally, with the highest amount of money ever traded in Hong Kong in a single day.
At first glance the rally should be great news for a city suffering from a downturn in business as retail sales trade with China continues to slow.
But some warn the great woosh of capital could leave as quickly as it comes – causing jolts to the economy of a powerful, but small city.
Ventuno/Reuters