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Mainland money continues to fuel stock surge in HK

I opened my first ever stock account eight months after I arrived in Hong Kong last August.

This city, called as China's gateway to the offshore market, is full of adventurers ready to make big bucks from all over the world.

"You've got to open an account, right now, before you lose the opportunity," a friend of mine who works for a Shanghai brokerage, but had opened a Hong Kong stock account two years ago, [Hong Kong company registration]urged me.

"The train's about to leave the station, and you've to get on it," he said.

One stock recommended by my friend surged more than 60 percent in just three days in late April. I rushed to a local bank and opened an account the next morning.

As a newcomer to the market, I chose three mainland-based companies with strong technology research backgrounds.
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They had been doing fine, but clearly underperforming their A-share listed peers.

Confident that the gap between valuation and performance would narrow, and I am still holding the shares.

Hong Kong's benchmark Hang Seng Index, flat during 2013 and 2014, had gained 20 percent this year by May 26, to 28,249, with many mainland investors pouring their money in.

Analysts say the central government has been supportive of this southbound movement in funds as it has helped direct capital from the red-hot A-share market (the benchmark Shanghai Composite Index soared almost 150 percent in the past year), and deflate any potential bubbles. Many believe the HSI could now pass 32,000 within the year.

Hong Kong institutional investors still hold an overwhelming proportion of the mainland equities listed on the local market, while many experienced smaller investors continue to remain loyal to particular Hong Kong stocks.

No one is denying the influence the mainland is having on the Hong Kong market, and even amateurs know much of that is down to the Shanghai-Hong Kong Stock Connect.

Mainland investors are now being seen as reshaping the Hong Kong market, for so long dominated by US-based investment banks backed by billions of dollars entrusted in them.

With more cross-border initiatives set to kick off, particularly the upcoming Shenzhen-Hong Kong Stock Connect, [Hong Kong Company Formation] as well as mutual recognition of funds (due July 1), the mainland investment style is likely to continue influencing the Hong Kong market profoundly.

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