Chinese investors boost net flows despite curb concerns

HONG KONG: Mainland Chinese investors have driven Hong Kong’s stock surge last month, buying a record amount of equities in the city even as concern grows that the rally is starting to lose momentum.

Net flows into Hong Kong’s stock market swelled to 70 billion yuan (RM43.5 billion) last month, the most since China opened the first investment channel to the city’s shares in 2014.

The Hang Seng Index jumped 3.3 per cent last month as heavyweights Tencent Holdings Ltd and Ping An Insurance (Group) Co helped it touch a decadehigh.

Despite the vote of confidence from across the border, signs of fatigue are growing.

After failing to hold gains above the key 30,000-point level, the Hang Seng headed yesterday for its steepest four-day decline in two months.

With only one month left this year, investors may look to cash in some of their winnings from the index’s 33 per cent rally this year.

On top of that, there’s concern China will curb the pace of flows into Hong Kong equities.

“The benchmark may have hiked too fast,” said Linus Yip, a strategist at First Shanghai Securities here.

“Funds are likely to become less aggressive and take profit towards year-end as they probably have achieved full-year targets.”

The Hang Seng was down 1.2 per cent as of 1.29pm local time, as some of the month’s best performers slumped following the United States tech selloff.

Ping An slid 2.5 per cent, while Tencent — which has more than doubled in value this year — lost 2.3 per cent.

AAC Technologies Holdings Inc retreated 4.6 per cent, paring its monthly advance to 12 per cent.

This week’s wider pullback was triggered in part by concerns Beijing was growing uncomfortable with the large flows from the mainland into Hong Kong.