The Hong Kong stock market may break into the third place among other world’s stock markets, thus overtaking the Japanese one by capitalization. On Thursday (April 9), the market capitalization totaled $4.9 trillion close to $5 trillion, the cost of Japan’s market.
Given increased demand for shares among Chinese investors during the last two sessions, the Hang Seng Index grew 6.6%. Presumably, it was because the securities of the Chinese companies traded in Hong Kong were undervalued with regard to the shares placed in Shanghai. The difference reached the highest score since 2011.
Over the latest year, the Shanghai Composite rose 87%.
“There will be more convergence between the mainland Chinese market and Hong Kong,” said Khiem Do, analyst at Baring Asset Management. “The trend will be positive for Hong Kong.”
Chinese investors bought the maximum daily allowance (10.5 billion yuan) twice for the first time since the start of the program within which the Hong Kong and Shanghai stock exchanges cooperate. Besides, the demand for the Hong Kong shares also increased under this program. Access to participation in the program given by the Chinese authorities to investment companies became a catalyst for growth of demand for Hong Kong’s securities.
Hong Kong Exchanges & Clearing Ltd. anticipates that the limit of the cooperation program will be extended.
