Update | Rush on mainland China shares as through-train stock scheme launches
Concerns over quota as launch of through-train stock scheme sees money surge to Shanghai, but only meagre flows in opposite direction
A rush by international investors into mainland shares upon the launch of a landmark scheme linking the Shanghai and Hong Kong markets has raised concerns over whether the trading quota is sufficient to meet demand. In contrast, Hong Kong stocks drew meagre inflows.
The daily quota of 13 billion yuan (HK$16.4 billion) that can be invested in Hong Kong on mainland stocks was used by 2pm, accounting for about 6.5 per cent of Shanghai's turnover of 199 billion yuan. Brokers worry that if the quota for mainland stocks is filled every day, it will take only 23 days to reach the total quota of 300 billion yuan.
Watch: Landmark Hong Kong-Shanghai stock link officially opens
Just 1.8 billion yuan of the daily quota of 10.5 billion yuan for mainlanders buying into the Hong Kong market was used. The volume of trade by mainlanders represented 3 per cent of Hong Kong's total main board turnover of HK$83 billion yesterday.
Securities and Futures Commission chairman Carlson Tong Ka-shing said it was too early to say if the quota was sufficient.
"In the first few days of the scheme, it will be mainly buying orders with little selling orders. As such, the quota, which is calculated on a net basis, would be used up soon. We need to wait until both buy and sell orders increase for us to know if the quota is sufficient," Tong said after a ceremony at the Hong Kong exchange to mark the scheme's launch.