Strong Hong Kong Dollar Signals A-Share Rally: Chart of the Day
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The Hong Kong dollar’s move to the stronger end of its trading range is a bullish sign for shares traded in Shanghai, according to China Merchants Securities Co.
The CHART OF THE DAY shows the Shanghai Composite Index rose 7.5 percent in July as Hong Kong’s currency traded near HK$7.75 versus the greenback, the upper limit of the fixed exchange rate. The city’s dollar last tested the strong end in the fourth quarter of 2012 and the stock gauge, which tracks yuan-denominated equities known as A shares, rose 15 percent in December that year. Before that was the November 2008-December 2009 period, when the securities rallied in 12 of 14 months. The Shanghai Composite surged 80 percent in 2009.