Market Wrap: Hong Kong stocks rise on “through-train” scheme

Hong Kong market rose on Monday following China’s central bank’s announcement last Friday to resume the so-called H-share “through-train” scheme, a move seen to be designed to open the door for mainland capital to flow into the Hong Kong market.

Although the benchmark gained by only 0.64 per cent, local brokers like Guotai Junan (1788.HK) and First Shanghai (0227.HK) surged after the announcement on speculation their mainland business would directly benefit from the scheme.

The benchmark Hang Seng Index added 149.19 points, or 0.64 per cent, to finish at 23,413.26. Turnover stood at HK$77.53 billion, compared with a two-week average of HK$77.1 billion.

Desmond Tjiang, PineBridge Investments fund manger, said the impact of the through-train scheme would be “marginally positive” for Hong Kong equities.

“The narrowing gap between A-H shares has made H shares less attractive as they were in 2007, when H shares were trading at a huge discount to A shares,” Tjiang said.

Guotai Junan surged 12.09 per cent to finish at HK$3.8, while First Shanghai gained 21.3 per cent to finish at HK$0.91. Shengyin Wanguo jumped 18.08 per cent to finish at HK$3.2.

In addition, the Shanghai Composite Index rose to a seven-month high as news of an expanded RQFII sent brokerage stocks soaring. The onshore benchmark gained 68.74 points, or 3.06 per cent, to finish at 2311.74.

Guo Shuqing, chairman of the China Securities Regulatory Commission (CSRC), on Monday said in Hong Kong that the regulator is in discussion with institutional investors about a new renminbi qualify foreign institutional investor (RQFII), extending the pilot program to non-Chinese investors.