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HONG KONG STOCKS
The stamp duty inspired weakness witnessed in the Hang Seng on Wednesday was further compounded by net outflows via the Hong Kong-China Stock Connect channels, with record net outflows lodged via that medium (totaling HK$19.96bn), breaking a run of daily net inflows that stretched back to December and included several rounds of record daily net inflows (as we had documented previously).
- As you can see from the chart, cases of net selling via the southbound Connect channels are few and far between, and tend to be much more limited in size when compared to Wednesday's record levels. It would seem that the stamp duty implications (a rise from 0.10% to 0.13% for that particular tax re: Hong Kong equity transactions) scared mainland investors away from chasing the discounts observed in H-shares vs. A-shares.
- From a technical perspective, as we flagged yesterday, downside focus falls on the 23.6% retracement of the Sep 25 - Feb 18 rally at 29,281 and a break here would shift focus to the 50-DMA. Conversely, bulls need to recover Feb 18 high of 31,183 to regain control.
- Wednesday's decline was also backed by record turnover levels in Hong Kong equities.
Fig.1: Net Hong Kong-China Southbound Stock Connect Flows (HK$bn)
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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