Hu-Gang Tong is a pilot program allowing investors in Hong Kong and on the mainland to trade a range of stocks listed on the other side’s bourse through securities firms in their own market. (image: Kobizmedia/Korea Bizwire)
SEOUL, Oct. 28 (Korea Bizwire) – Ahead of the implementation of the Shanghai-Hong Kong Stock Connect, or “Hu-Gang Tong,” the volume of direct investment in stock markets in the Greater China Region by Korean nationals is rising rapidly. Accordingly, most of the Korean investment in overseas stock markets has focused on the Hong Kong stock market.
Hu-Gang Tong is a pilot program allowing investors in Hong Kong and on the mainland to trade a range of stocks listed on the other side’s bourse through securities firms in their own market. It is part of the Chinese central government’s effort to connect the domestic securities market with those overseas.
Korea Securities Depository said on October 27, “The net-buying amount of Hong Kong exchange stocks purchased by Korean investors through us was US$151.91 million during the third quarter. This is slightly more than the total net-buying volume made by domestic investors during the same period, which is $151.58 million.”
During the quarter, Korean nationals net-bought stocks worth $8.74 million from American stock markets while net-selling $28 million and $30,000 with Japanese and Chinese stock markets, respectively. In other markets such as the European ones, Korean nationals net-sold $18.96 million worth of stocks. Meanwhile, the cumulative balance with the Hong Kong stock exchange for the nine months of the year was $255.62 million.
The main reason Korean investors are turning their attention to the Hong Kong stock markets has to do with the fact that they have increased their investment in Chinese companies listed on Hong Kong stock exchanges as Chinese stock markets are currently restricted to foreign investors. In addition, as the implementation of the Shanghai-Hong Kong Stock Connect scheme is nearing, investors are trying to capitalizing on the change.
As of October 23, the top-five Hong Kong stocks held by Korean investors were China Gas Holdings (gas retailer), People’s Insurance Company of China (state-run insurance firm), Tencent (social networking service operator), Tingyi Holding (food company), and BYD (auto maker), all of which are Chinese mainland firms.
By Sean Chung (schung10@koreabizwire.com)
