China fund houses seen as spur for inflows into HK market once hurdles cleared
Moves under way to enable mainland fund houses to invest in Hong Kong stocks loom as a catalyst for further inflows into the market after the approval of short selling to boost the market link with Shanghai.
Many mainland funds do not have mandates to invest outside the mainland and so cannot participate in the cross-border trading scheme, Hong Kong Exchanges and Clearing (HKEx) chief executive Charles Li Xiaojia said yesterday.
“Mainland funds not investing in the stock connect scheme is one of the reasons for the weak southbound investment,” said Lee, referring to the lacklustre investment flows from the mainland to Hong Kong. “Fund houses are trying to get shareholders to vote to change their mandates so that they can invest in Hong Kong stocks via the scheme. When this obstacle is removed, southbound investment will improve.”
Li was speaking after co-hosting with HKEx chairman Chow Chung-kong the market opening ceremony for the first trading day of the Year of the Goat, which had a flat start.
Exchange officials have been seeking to drum up business for the market link scheme, particularly for the southbound trade, where volumes have been dwarfed by northbound flows amid a market rally.
Fund houses are trying to get shareholders to vote to change their mandates so that they can invest in Hong Kong stocks via the scheme. When this obstacle is removed, southbound investment will improve
Li early this month Li announced a range of measures to boost trading, including expanding the total quota, a reduction in market holidays and adding to the number of stocks that be traded under the scheme.