Funds Rush to Bet on China-Hong Kong Stock Link After 27% Return
The Exchange Square Complex, which houses the Hong Kong Stock Exchange, in Hong Kong, China.
Photographer: Lam Yik/BloombergA popular strategy pops up in Hong Kong around this time each year: betting on which stocks will be added to a trading link giving mainland buyers easy access to the city’s shares.
The trade is simple enough: buy stocks of likely candidates in advance and sell on inclusion. Shares added to the Hang Seng Composite Index in the March and September reshuffles last year, and included in the trading connect shortly after, jumped an average 27%, based on their prices 20 days before and after the index announcement, according to Mizuho Securities Asia Ltd.