Chinese investors hunt for bargains in Hong Kong as rally shows underlying strength

A basket of dual-listed blue-chip financial firms in the Hong Kong and Shanghai markets finished in a mixed bag on Thursday, suggesting mainland Chinese investors have started to cash in and are seeking bargains in the city’s stock market.

Hong Kong-traded shares in China Life, a proxy of China’s A-share market due to its large exposure to the mainland stock market, rose 5 per cent to finish at HK$39.1, a fresh 52-week high, while the Shanghai-traded shares of the country’s largest insurer dropped 2 per cent as the overall market retreated.

Other financial companies including Ping An, Citic Securities, and Haitong Securities posted a similar performance.

Hong Kong’s benchmark Hang Seng Index extended the bull run for the second consecutive day on Thursday, with overall turnover reaching a fresh record high of HK$294 billion.

The daily 10.5 billion yuan quota under the Hong Kong-Shanghai stock connect scheme was used up for the second day as well, but there was net selling in the northbound trade Thursday while the southbound saw net buying, reinforcing a market consensus that the onshore market may experience a correction in the short-term.

The Hang Seng index traded at 12.9 times forecast earnings this year, compared with 16 and 31 times earnings in Shanghai and Shenzhen markets, which rose 22 and 48 per cent respectively.