Stock Connect

Stock Connect sees 2 trillion yuan traffic, with Ping An the big winner

Northbound investment has dwarfed traffic heading out of the mainland

PUBLISHED : Sunday, 15 November, 2015, 6:59pm
UPDATED : Sunday, 15 November, 2015, 6:59pm

More than 2 trillion yuan has poured through the Shanghai-Hong Kong Stock Connect scheme in the year since it was launched.

Investors inside and outside mainland China have bought and sold 2.066 trillion yuan in stocks, according to data from the Hong Kong exchange, mostly in the insurance, banking and consumer sectors.

While some purchasing of mainland stocks by select international companies had been previously allowed through programmes such as the Qualified Foreign Institutional Investor scheme, begun in 2002, the Stock Connect was the first time retail investors on the mainland and worldwide could engage in cross-border trading.

Northbound investment from international investors into Shanghai dwarfed traffic heading out of the mainland, with only 591 billion yuan worth of southbound transactions in the first year, compared with 1,475 billion yuan heading north.

On an average day, about 226,000 trades flow back and forth between Hong Kong and Shanghai, with average turnover of about 9.1 billion yuan, according to HKEx statistics.

International investment in mainland Chinese stocks grew steadily from November last year, peaking in June. But following the mainland’s stock market crash on June 12, buy trades had plunged to 41 billion yuan by September, down from a high of 116 billion just three months earlier.

Since then the total value of northbound trades has continued to shrink.

The number of mainland investors buying stocks in Hong Kong through the scheme skyrocketed in April, increasing more than six times from HK$23 billion in March to HK$143 billion after the central government allowed mainland fund houses to invest in Hong Kong stocks.

Despite not having a large market cap, Ping An Insurance was the most popular stock among northbound investors by a wide margin, with $110 billion yuan in turnover, followed by Kweichow Moutai.

“[Ping An’s] fundamentals are good and it provides very good transparency ... international players still focus on the fundamentals when buying stocks,” Jun Yang Securities chief executive Kenny Tang Sing-hing said. “The domestic markets is more focused on infrastructure stocks.”

For mainland buyers investing in Hong Kong-listed stocks, electrical appliance supplier Gome, SH Electric and brokerage firm Haitong Securities had the highest turnover, while Ali Pictures came in at seventh with HK$11 billion.