Shen­zhen ex­change at­tracts net in­flows

China Daily (Hong Kong) - - BUSINESS -

Trad­ing un­der the new­ly­launched Shen­zhen-Hong Kong Stock Con­nect has been s mooth, with the Shen­zhen-listed stocks at­tract­ing con­tin­u­ous net cap­i­tal in­flows, the Chi­nese se­cu­ri­ties reg­u­la­tor said on Fri­day.

Over­seas in­vestors have shown greater en­thu­si­asm to trade the Shen­zhen-listed stocks, with to­tal trans­ac­tions reach­ing 18.9 bil­lion yuan ( $2.7 bil­lion) as of Thurs­day, eclips­ing the south­bound trans­ac­tion (main­land in­vestors trad­ing Hong Kong-listed shares) of 4.5 bil­lion yuan, ac­cord­ing to the reg­u­la­tor.

Zhang Xiao­jun, spokesman of the China Se­cu­ri­ties Reg­u­la­tor y Com­mis­sion, said that the trend of north­bound trad­ing be­ing more ac­tive than the south­bound one re­flected the al­lo­ca­tion de­mand of Shen­zhen-listed stocks by over­seas in­vestors.

The trad­ing link between Shen­zhen and Hong Kong was launched on Dec 5, as China moved to fur­ther open its stock mar­ket by of­fer­ing over­seas in­vestors greater ac­cess to the main­land’s shares.

Gao Ting, head of China strat­egy at UBS Se­cu­ri­ties, said in a re­search note that for­eign in­vestors will fo­cus more on mid to large-cap stocks in Shen­zhen with strong growth po­ten­tial, par­tic­u­larly in the con­sumer, health­care and tech­nol­ogy sec­tors.

On Fri­day, Chi­nese stocks capped their steep­est weekly re­treat since April as surg­ing money mar­ket rates re­duced in­vestor de­mand for eq­ui­ties.

The Shang­hai Com­pos­ite In­dex slumped 3.4 per­cent this week, end­ing on Fri­day 0.2 per­cent higher at 3,122.98 at the close.

Prop­erty com­pa­nies fell the most dur­ing the week, with China Vanke Co plung­ing more than 9 per­cent. A reg­u­la­tory crack­down on in­sur­ers’ stock in­vest­ments added to in­vestor jit­ters.

Mean­while, China’s sovereign bonds headed for their big­gest weekly de­cline in two years as the cen­tral bank sought to force a cor­rec­tion in the highly lever­aged debt mar­ket by steer­ing money mar­ket rates higher.

Home prices are also show­ing signs of cool­ing af­ter cities rolled out mea­sures to curb gains, while con­cern about a faster pace of US in­ter­est-rate hikes is pres­sur­ing the yuan, al­ready at an eight-year low.

Hong Kong’s Hang Seng In­dex slipped 0.2 per­cent, tak­ing its weekly loss to 3.3 per­cent, while the Shen­zhen Com­pos­ite In­dex rose 1 per­cent.

“We are facing too many un­cer­tain­ties in­clud­ing the US in­ter­est rate out­look and cap­i­tal out­flows from China,” said Steven Le­ung, Hong Kong-based ex­ec­u­tive di­rec­tor at UOB Kay Hian.

Bloomberg con­trib­uted this story.

the gain in the bench­mark Shang­hai Com­pos­ite In­dex on Fri­day

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