Stocks link with mainland takes Hong Kong market to three-year high
Funds flow into Hong Kong, driven by stocks link-up with mainland and optimistic outlook
Hong Kong stocks rallied to finish at a three-year peak yesterday and are on course to test record highs.
The market was driven by a strong flow of funds into the city ahead of the Hong Kong-mainland stock connect scheme in October and optimism about economic conditions on the mainland.
The Hang Seng Index closed up 0.7 per cent at 24,141.50 points, its highest close since April 2011. The China Enterprises Index of the leading offshore Chinese listings in Hong Kong was up 1.1 per cent to close at its loftiest level since December 2013.
"Liquidity will continue pouring in and recovering China data is accelerating fund managers' pace of buying in Hong Kong equities," said Linus Yip, chief strategist at First Shanghai Securities, who expected the index to reach at least 25,000.
"Fund managers are busy pre-positioning in the Hong Kong market ahead of the stock connect scheme. They favour undervalued Chinese blue chips such as property developers and banks," he said.
Under the stock connect scheme, Hong Kong investors will be able to trade up to 300 billion yuan of mainland A-shares, subject to a maximum of 13 billion yuan a day.