Hong Kong's stock market is rebounding from a weak start in 2024 due to an improving economic landscape nationwide and the strong influx of mainland investment, experts told the China Central Television (CCTV).
Hong Kong's benchmark Hang Seng Index has been above the 18,000 points mark for the past week, up more than 20 percent from a low of below 15,000 points in January.
In the first four months of this year, southbound capital inflows into Hong Kong's stock market totaled over 26.8 billion U.S. dollars, according to a report by Wind Information Company.
"The inflow of incremental capital is much higher than the same period in 2022 and 2023. In March and April in particular, the scale in the two months had exceeded 80 billion HK dollars (about 10.24 U.S. dollars). It has directly affected the recent performance of Hong Kong stocks," said Yan Xiang, chief economist of Huafu Securities.
Experts say the capital inflow has also resulted from the improved quality of Hong Kong stocks. Data shows that the share of mainland companies in Hong Kong stock market has remained above 70 percent since 2019, and an increasing number of Hong Kong-listed companies have seen their businesses closely related to the mainland. Therefore, strong economic data in Q1 has boosted investors' confidence.
"With the improvement of overall economic situation, the businesses of more and more companies are getting better, which has generated positive market expectations on those Hong Kong-listed companies. With closer mainland-Hong Kong economic exchanges, even for the remaining 30 percent of Hong Kong companies, most of their business revenues are coming from the mainland. In fact, the changes we have seen in the Hong Kong market and its closer bond with the mainland, to a large extent, point to a good economic outlook for the mainland," said Zhao Yue, chief economist of Hong Kong Chief Securities.
Apart from buying shares, investors can also get into the Hong Kong market through exchange-traded funds (ETFs), which are open-ended funds listed and traded on stock exchanges.
With the approval of the country's securities regulator , the mainland's Shanghai and Shenzhen stock exchanges announced on Monday to add another two products into the list of ETF funds eligible for trading within the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes, marking the first expansion of the list this year.
Relevant Authorities have introduced a flurry of measures since the start of this year to boost market connectivity between Hong Kong and the mainland.
On March 13, the China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong agreed to strengthen practical cooperation between the two capital markets and coordination on cross-border regulatory and law enforcement activities to make collective progress through leveraging complementary strengths.
On April 19, the China Securities Regulatory Commission released a set of five measures aimed at boosting mainland-HK capital market cooperation. That included expanding the scope of eligible ETFs under the stock connect schemes to enhance the schemes and support Hong Kong's efforts to strengthen its status as an international financial center.
Real estate investment trusts (REITs) will also be incorporated into the schemes, and the inclusion of yuan-denominated securities in southbound stock connect scheme trading will be supported, the regulator said.
"Those five measures will enrich investors' options and risk management toolkits, help attract more mainland investment to Hong Kong, and increase the trading activity of Hong Kong's stock market. Meanwhile, there will be more RMB settlement in the capital market and the application of RMB will be further expanded, which will greatly promote the internationalization of the currency," said Yang Chao, chief strategy analyst of China Galaxy Securities.
Hong Kong stocks rebound amid increased mainland capital inflow: experts
