Chinese Investors Eyeing Hong Kong’s Falling Stocks

The protests in Hong Kong are causing its stocks to drop and its economy to slow down, says Al Jazeera. To mainland investors, Hong Kong’s plummeting equity market is proving to be attractive.

Investors from mainland China recently bought a total of $5.1 billion in Hong Kong stocks just within the last 20 sessions. A Bloomberg report cited by Al Jazeera says that this is the longest series of incoming revenue for HK since February in 2018. The report also revealed that mainlanders made the biggest purchases in almost 10 months.

The Hang Seng Index trading shows that recent valuations are nearly the lowest since 2016. In fact, the values are 1.1 times their book value. The records also revealed that HK-based shares showed one of the worst performances in the last month.

Al Jazeera noted that the protests combined with Beijing’s preparation for a crackdown and dwindling performance of yuan caused the economic slowdown in Hong Kong. Members of the Hang Seng Index are expected to bear the worst of the financial crisis.

Shanghai-based wealth manager He Qi from Huatai PineBridge Fund Management Co said that these conditions make HK investments ideal. He purchased HK stocks as the unrest rises. He noted that he will be “willing to stomach any loss” should the market experience further falls.

Other wealth management companies have also expressed confidence in the stocks as Shenzhen Kaifeng Investment Management Co. thinks that the “worst of the city’s unrest is likely over.” Gai Bin, the chief economist in the firm, remarked that the property and financial industry in HK seems to have potentials in the future.

Tai Yifei from HFT Investment Management Co. noted that the huge differences in the valuations between China and Hong Kong have offshore investments a new appeal.