Deluge of China investors into HK stocks both boon and bane

Shanghai

SURGING investment from mainland China has jolted Hong Kong's stock market from the doldrums, but the volatility of such flows, driven by an unfamiliar breed of investor, presents new risks to the stability of the city's economy and currency.

A Reuters analysis shows that Chinese investors have moved a net 68 billion yuan (S$14.9 billion) into Hong Kong-listed stocks via the Shanghai-Hong Kong stock connect programme since its launch in November, the vast bulk of it during just a few days in April. That new money, plus tens of billions of dollars from a separate channel for Chinese institutional investors and untold flows from Chinese-controlled offshore funds, has helped push the market's capitalisation to HK$28.6 trillion (S$5 trillion) in April from HK$25.5 trillion in November.