How Long Will Mainland Money Love the Hang Seng?
Hong Kong has seen such investment sweep in and out before. Two factors are in play now: sector allocation and day traders flocking to mutual funds.
Can Tencent’s allure endure?
Last week I was still mulling over how a sudden flood of mainland Chinese money was changing Hong Kong’s market composition. This week, the investors I called the amateurs at the gate were already in the city center, creating jaw-dropping headlines about the bourse’s most prominent blue-chip, Tencent Holdings Ltd. Thanks to them, the Hang Seng Index has returned 7.9% this year, outperforming the S&P 500 and China’s benchmark CSI 300 Index. Index heavyweight Tencent is up 27%.
If 2015 was any guide, the southbound money flow into Hong Kong through the Stock Connect — which links the city with mainland bourses in Shenzhen and Shanghai — can vanish as fast as it appeared. Back then, mainland investors gobbled up Hong Kong stocks in the first half of April, and then suddenly left, even though other market participants tried to revive trading that May and again in July. Will the mainlanders vanish again, taking animal spirits with them?