SEOUL, Dec. 16 (Korea Bizwire) – It has been almost two weeks since China’s ambitious Shenzhen-Hong Kong Stock Connect was launched, but the trading link has so far failed to drum up much excitement, at least from the point of view of Korean investors.
According to the Korea Financial Investment Association, the aggregate trade volume of local investors, as of market close on Thursday, totaled 37.2 billion won ($31.4 million).
December 5, the launch-day of the new link, was the only day that the daily trade volume exceeded 10 billion won, at 10.6 billion, not too far off from November 17, 2014 – the day the Shanghai-Hong Kong Stock Connect launched – when volumes were just short of 14 billion won.
It was all downhill from there. Trading volumes dropped to 8 billion won on December 6, 5 billion on the 7th, 3 billion on the 9th, and ultimately 1.6 billion on Thursday, December 15.
Industry watchers point to China’s frail stock market, which has been volatile in recent months, in addition to weary investors who had already experienced losses from the Shanghai-Hong Kong Stock Connect, or from Chinese funds in general.
“The financial market, globally, is not as robust as it has been in the past,” said Yuanta Securities analyst Sun Woo-jin. “Reinforced measures affecting insurance companies and a lack of liquidity have also lead to a weak Chinese stock market, suppressing investment sentiment.”
The Shenzhen-Hong Kong Stock Connect allows local investors to invest in companies listed on the Shenzhen Stock Exchange, the Chinese equivalent of the NASDAQ, through 16 Korean securities companies. Similar to the Shanghai-Hong Kong Stock Connect, the minimum share purchase is 100, with a daily ceiling and floor range of -10 to 10 percent.
By Kevin Lee (firstname.lastname@example.org)