2017
03-23
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Information Times: SH SZ and HK Exchanges jointly tightened regulation rapidly narrowing hot money travel throug stock connects
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Information Times (Zhao Xian) In the past, the hot money was known as “suicide squad”. However, as the crackdown on the violation of laws and regulations of hot money in capital market has been intensified while the joint cross-border regulation system among the Shanghai Stock Exchange, Shenzhen Stock Exchange and Hong Kong Stock Exchange are getting strict increasingly, hot money is facing the most stringent regulation environment. 

 

Given the tighter regulation on hot money and the drastic stock price fluctuation of Hong Kong listed company Meitu on this Tuesday, rumors of hot money shifting to Hong Kong stock market have been widely spread. According to data from Hong Kong Stock Exchange, Meitu company is the most active individual stock, listing as top 1 and top 2 in Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, respectively. There was a HKD 476 million buying order from mainland China on Tuesday, and the net buy-in reached 179 million HKD.  Does it imply that hot money from mainland China tends to enter the Hong Kong stock market? 

 

Li Wei, Executive Vice President of OP Investment Management, commented, “In A-shares market, most investors are retail investors who can be very emotional, which makes it extremely easy for hot money to take advantage. On the opposite, 70% of investors in the Hong Kong stock market are institutional investors who are very rational. They won’t buy in for a temporary stock uplift. In addition, Hong Kong stock market is riskier as there is no raising limit.” One private fund manager stated that Meitu company is just an individual case. Even though the domestic living space for hot money is narrowing down time by time, it won’t largely flow to the Hong Kong stock market. Even if someone is doing this, they are just testing the water. It is not easy for them to adapt to the overseas market environment.

 

View the article (Chinese)
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