No turnover was recorded on the first day of northbound short selling under the Shanghai-Hong Kong stocks through-train scheme.
Louis Tse Ming-kwong, a director of VC Brokerage, said there was no short selling of A shares via Hong Kong because investors were worried the market might go up as a result of Saturday’s interest rate cut on the mainland.
“The market sentiment for A shares was not so bearish after the People’s Bank of China cut the interest rate,” Tse said.
Mainland banking stocks may be the ones that would become the target of short sellers
He said some people believed more rate cuts could follow.
Short-selling, which allows investors to sell stocks they do not own and later buy them to square the account, is used for hedging and to profit in bearish markets. Hong Kong Exchanges and Clearing (HKEx) allowed investors to short-sell Shanghai-listed A shares under the scheme from Monday. Mainlanders have always been allowed to short sell Hong Kong stocks via the scheme.
Tse said stocks in construction and infrastructure or those with high gearing would benefit from the rate cut and would not become targets of short sellers.
“The mainland banking stocks may be the ones that would become the target of short sellers as their net interest margin would be affected by the rate cut,” he said. Keen competition for deposits means mainland banks can struggle to cut deposit rates by the same amount as lending rates.