Asia Capital Markets Research

How’s that trading on the HK-Shanghai coming for you today? We had hinted at it before in the previous couple of weeks, but it looks like the HK-Shanghai connect is delayed indefinitely with some sources saying anything from a two week to two month delay.

The Shanghai-Hong Kong Stock Connect Program is launching in mid October and significant changes to the Chinese capital markets landscape are to be expected. Also labeled as the (new?) “Through Train”, this program will give foreign retail investors access to 568 Shanghai-listed stocks, with a market capitalization of roughly USD 2 trillion, and many are already waiting in anticipation for the door to be opened. A brief analysis of the Shanghai Hong-Kong Stock Connect.

The Australia Securities Exchange reported a year on year increase on revenue and profits yesterday on the back of strong IPO performance. Net income hit A$383.2 million from A$348.2 a year before.

The Shanghai–Hong Kong Stock Connect is coming soon as dates for official testing are announced already. According to HKEx, market rehearsals will be held since late August to September, where exchange participants will conduct trading, clearing and settlement activities to verify readiness of the all involved systems.

In the latest SWIFT RMB tracker report, usage of RMB in cross-border payments involving HK and China increased 36% to 12%, but still has ways to go.

The RMB continued its relentless march towards being a trade currency with over US$15 billion in RMB bond issuance in the city-state of Singapore - more than doubling the issuance of 10 years ago.

According to the latest numbers from Ministry of Commerce of PRC, in the first 4 months of 2014, the investment into Hong Kong from Mainland and exports from Chinese mainland to Hong Kong decreased largely.

On April 10, 2014, the Chinese government approved the proposal for Hong Kong-Shanghai Stock Market Connect program, which will allow mainland investors to directly trade stocks in Hong Kong market and Hong Kong investors to trade equities in A-share markets.

Recent figures from Eurekahedge showed that the general ROI of Asian hedge funds (10.1%) surpassed that of North American hedge funds (6.3%) and Europe hedge funds (5%) for the first 3 quarters of 2013. However, among Asian countries, Japanese and Chinese hedge funds have experienced relatively high ROI while Indian and South Korean hedge funds suffered from negative ROI. Market analysts suggested that, the high ROI from China is because of the sustained and relatively fast economic growth, while the high ROI for Japan is for the massive economic stimulation. 

Global Hedge Fund Performance

According to the PBOC, the value of new RMB loans in the first quarter of 2013 are at a three-year high. In the first quarter of 2013, the new lending is 2.76 trillion yuan, growing by 13%, compared with 2.46 trillion yuan in the same period of 2012. It signals that the financing demands in the market start are increasing and analysts believe the total new loans will reach 9 trillion yuan in 2013. More interestingly, among the newly increased loans, 30% of the loans are long-term loans, showing a sign of a strong economic rebound in China.

 

 

 

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