China's move Thursday to open up its stock markets to more foreign cash, while allowing further access for domestic investors to Hong Kong could be more of a boon for its domestic bourses than for the former British colony.
While shares in Hong Kong's stock exchange operator, Hong Kong and Exchanges Clearing Ltd., rose 11% on Friday, on hopes of massive inflows of money from the mainland, past experience shows those hopes may be misplaced. On Wednesday, after months of talks between the two markets' regulators, China approved a program that will allow investors in Hong Kong to plow up to 13 billion yuan ($2.1 billion) a day into mainland shares, up to a maximum 300 billion yuan. Mainland investors can send a lower number -- up to 10.5 billion yuan a day-- to Hong Kong, capped at 250 billion. Investors can buy dual-listed and blue-chip stocks on both exchanges.
UBS said in a note Friday that the Hong Kong stock exchange's market turnover isn't likely to raise market turnover by any more than a 'mid-single-digit', adding that Shanghai may end up being the longer term winner of the new rules.
'We note that historically there has been more demand for QFII quotas which are often fully utilised (money going in to China),' UBS said. 'Demand for QDII quotas (money coming out of China) has been more limited with we believe less than 50% currently utilised.'
Currently, Chinese financial institutions and individuals are allowed to invest $86.59 billion in foreign investments under a quota, known as the Qualified Domestic Institutional Investor program. That QDII program has only been 41% utilized, according to numbers from state media reports. That's because many domestic Chinese investors had their fingers burnt after the financial crisis and has been less keen on investing overseas since then.
Many Chinese investors rushed to buy the first batch of QDII funds in 2006. Those were mainly invested in Hong Kong stocks, which plunged 48% in 2008 alone.
Questions remain among brokers and asset managers over whether those institutions already permitted to invest in China through an existing mechanism will be able to invest under the new scheme.
The qualified foreign institutional investor (QFII) regime gives international buyers a quota which they may invest directly in the country's stock markets. China had allowed a total of US$53.6bn of foreign capital to be invested in the mainland's securities market as of March, according to the State Administration of Foreign Exchange. 'We're not sure if we can circumvent the QFII,' said one Hong Kong-based fund manager.
How the different classes of investors will be treated was not something that had yet been spelled out by regulators, said Mark Chan, a partner at the law firm Berwin Leighton Paisner. 'I don't see conflicts between the two, but it might be a case where they'll try to reconcile the limits,' he said.
Bloomberg news港交所交易员在电脑前工作。香港证券交易所运营商香港交易及结算所有限公司(Hong Kong Exchanges and Clearing Ltd.，简称：香港交易所)的股价周五涨11%，原因是投资者预计大量内地资金将流入香港，但根据以往经验，这样的期望可能并不适当。周三，在两地监管机构进行了数月的协商后，中国批准了一项计划，允许香港投资者每日向内地股市投资最多人民币130亿元（合21亿美元），总额度为人民币3,000亿元。内地投资者每日可向香港股市投资最多人民币105亿元，略低于前者，总额度为人民币2,500亿元。投资者可在两个交易所购买在两地上市公司的股票和蓝筹股。
瑞士银行表示，该行注意到，历来对合格境外机构投资者(QFII, 流入中国的资金)额度的需求更大，QFII额度常常用光。它还说，合格境内机构投资者(QDII, 流出中国的资金)需求较为有限，该行认为目前额度只用了不到50%。
英国博问律师事务所(Berwin Leighton Paisner)的合伙人Mark Chan表示，监管机构尚未说明不同类型的投资者的待遇有何区别。他认为二者没有冲突，但可能需要监管机构协调相关的限制。