Investors in Hong Kong keen to board stock train
While the city's daily trading quota could easily be reached amid strong demand, only a handful of mainlanders are interested in buying H shares
Hong Kong investors have expressed strong interest in buying Shanghai-listed A shares when the stock connect scheme is launched on Monday, but reaction to the "through train" in Shanghai has been more lukewarm.
Banks and brokers in Hong Kong said they had seen a number of customers make preparations to buy A shares before the debut of the 550 billion yuan (HK$693.9 billion) scheme that allows cross-border trading of equities, indicating the daily quota of 13 billion yuan could easily be reached.
But three brokers in Shanghai said only a "skinny number" of retail investors were likely to jump on the through train and buy shares in Hong Kong on Monday.
Beijing, keen to ensure a successful launch of a programme that marks a significant milestone in the liberalisation of capital controls on the mainland, announced yesterday that it would exempt investors from paying capital gains tax on stock-trading profits through the scheme.
In Hong Kong, several banks and brokers said some customers had given orders for exchanging large sums of yuan on Monday, when the 20,000-yuan daily exchange cap will be lifted, so that they could buy A shares when the scheme kicked off.
"Monday will basically be a 'buy'-orders-only market for the cross-border scheme because we do not have shares on hand to sell shares across the border," Hong Kong Securities Association chairman Jeffrey Chan said. "Hong Kong investors can only buy from the selling orders by mainland investors."
