Park­ing on Wall Street?

China Daily (Canada) - - HONG KONG -

The count­down has al­ready be­gun, at least in Hong Kong, on lifting the mora­to­rium on the sale of main­land shares by in­sti­tu­tional in­vestors sched­uled for Jan 8. It has been widely re­ported in Hong Kong that over­seas in­vestors have been un­load­ing their main­land shares in ex­pec­ta­tion of an avalanche of sales or­ders af­ter the hol­i­day break that could push the mar­ket even lower.

But there are those who are more san­guine, be­liev­ing that any ex­ces­sive down­ward pres­sure would be soft­ened by the main­land au­thor­i­ties who are seen to be keep­ing a close eye on mar­ket be­hav­ior. But the widen­ing dis­count of Hong Kong-listed H-share prices to those of Shang­hai-listed A shares is an in­di­ca­tion of the lack of con­fi­dence in the main­land mar­ket on the part of many Hong Kong-based for­eign in­vestors.

As noted in last week’s col­umn, in­vest­ing in both Hong Kong and main­land shares seems to make lit­tle sense at the mo­ment. Hong Kong faces a myr­iad of eco­nomic prob­lems aris­ing, at least partly, from the main­land’s nag­ging eco­nomic slow­down. The con­tin­ued de­pre­ci­a­tion of the ren­minbi against the Hong Kong dol­lar has re­moved one of the ma­jor in­cen­tives for in­vest­ing in main­land as­sets.

The ques­tion fac­ing many in­vestors is where to park their money in 2016. If you lis­ten to the big money, they have been telling us there’s no im­pend­ing rea­son for the SAR to fol­low the United States in rais­ing bank in­ter­est rates. But that’s lit­tle con­so­la­tion in the face of mount­ing neg­a­tive eco­nomic data that is sap­ping in­vestors’ con­fi­dence and damp­en­ing their spir­its.

Buy­ing main­land bonds to take ad­van­tage of the gov­ern­ment’s ef­forts to prop up the mar­ket doesn’t seem to be an ap­pe­tiz­ing op­tion ei­ther, be­cause any price gain from lower in­ter­est rates could be negated by the Chi­nese cur­rency’s devaluation.

The same is true for in­vest­ing in neigh­bor­ing Asian economies, in­clud­ing Ja­pan, at a time when nearly all their cur­ren­cies are fall­ing against the Hong Kong dol­lar.

Most Hong Kong in­vestors have largely by­passed Europe which is still haunted by a pos­si­ble out­break of an­other Greek debt cri­sis. Bar­ring that, the Euro­pean eco­nomic re­cov­ery is patchy at best and the euro looks any­thing but strong.

Apart from park­ing your money in bank de­posits and tak­ing a long va­ca­tion on a par­adise is­land in the Pa­cific, you can con­sider in­vest­ing in US stocks while the green­back ap­pears to be in­vin­ci­ble, and in the be­lief that Pres­i­dent Barack Obama will do what­ever he can to keep the econ­omy and the mar­ket hum­ming to give his party a bet­ter chance of win­ning the White House for at least an­other four years.

A good bet may be to in­vest in US stocks while the green­back ap­pears in­vin­ci­ble and the White House keen on keep­ing mar­kets hum­ming.

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