The View | Why won’t Hong Kong stock exchange trumpet its advantages over mainland China bourses?
Arbitrary actions of mainland securities authorities hardly came as a blinding revelation
Did you hear the great news for the Hong Kong stock market last week? No? You certainly did not hear it from the fine folk who run the local stock exchange after they were afflicted by an outbreak of coyness.
Usually people who run markets can’t wait to extol their competitive advantages. So why are the Hong Kong stock exchange leaders seemingly reluctant to even mention the turmoil in mainland markets or the cack-handed way that this turmoil was handled?
Maybe political pressures explain this silence but events over the border provide excellent news for Hong Kong where trading remained unhindered as mainland markets closed. Added to this the local bourse has a record of selling the cream of the crop of Chinese equities at a healthy discount to prices in Shenzhen and Shanghai.
It is true that access to Hong Kong’s market is problematic for the mass of private Chinese investors who trade shares on the mainland but it is quite a different story for the big international institutional investors who remain interested in Chinese equities.
In case any of them missed the point, it was rammed home with a vengeance that the safest and cheapest place to trade these equities is in Hong Kong. Moreover Hong Kong transactions are conducted in a freely traded currency and our market offers the full array of hedging instruments, now banned across the border.
The message coming out of the stock exchange is that Hong Kong’s priority is to be more closely integrated with mainland markets
Admittedly the arbitrary actions of mainland securities authorities hardly came as a blinding revelation but a new level was reached following the failure of a predictably dubious circuit breaker device designed to close the market in the wake of a 5 per cent fall and suspend trade for an entire day following a 7 per cent decline. Last week’s abrupt market closure forced a policy reversal within the space of four days. To avoid doubt as to whether the word of the market regulators could be trusted they also chose last week to announce that they were going back on a promise to allow larger shareholders to resume trading after the planned termination of the six-month disposal freeze prompted by sharp price plunges last summer.