Global Buyers Frantically Buying Up Shanghai Stocks as Exchange Link Debuts
Shanghai stocks were being snapped up by global buyers during the debut of an exchange link that no allows Hong Kong and Shanghai investors to trade shares on each other bourses. A step in the opening up of the capital markets on the Chinese mainland. The stock connect program allows foreign and mainland retail investors an unprecedented access to two of the biggest exchanges.
This access in which analysts are saying that will eventually lead to the creation of the third biggest stock exchange. Shares in Hong Kong and Shanghai has opened 1 percent higher but quickly gave up some of the gains as the Hong Kong market fell into negative territory. The sheer volume trade investors with Hong Kong accounted for buying mainland shares is far greater than the trade coming from mainland investors going the opposite direction even with a daily buying quota for Shanghai stocks is already exhausted by afternoon.
Investors are also cautious of going after shares that give a strong rally for the lead up to the launch on the expectations of the increase in the fund flows of the program. The longer it will run the connection will benefit both of the markets as China increasingly opens up their market to the outside world.
Most of the initial cash flow is expected to be northbound with foreign investors in the Hong Kong stock exchange can collectively buy a daily quota of 13 billion yuan in mainland stocks. The expected inflow will help push the SSE380 Index and the SSE180 Index two of the main Chinese destinations for foreign investment up by ten percent since late month.