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Standard Chartered: Look Out For Telcos, Energy Counters In Hong Kong
Aspire, Hot Picks | 21 November 2014
By: Simeon Ang
Articles (125) Profile

The Hong Kong-Shanghai Stock Market Connect (HK-SH Connect) has been live for a good four days worth of trading. So what has it to show? Frankly, not much. According to our observations, the Shanghai Composite Index actually fell 2.2 percent since the HK-SH Connect came online. The Hong Kong Stock Exchange did not fare very well either, losing 3.8 percent since the scheme came online.

The short term positive impact the HK-SH Connect was slated to have, failed to materialise. While there can be many reasons for the largely negative performance, retail investors might want to note that the HK-SH Connect scheme does provide ample opportunity for the savvy investor.

Taking Advantage Of “Scarcity”
As mentioned in the video above, Standard Chartered Investment Strategist, Audrey Goh mentions that investors can pick certain sectors and China companies that are absent in Shanghai, but listed in Hong Kong. In particular, Goh pointed out stocks in the Gaming, Telecommunications, and Energy sector.

Gaming stocks include companies such as Sands China and Galaxy Entertainment. Other stocks worth looking into include Tencent, Lenovo, Kingsoft, China Oilfield Services.

Another stock that comes to mind is Hong Kong Exchanges and Clearing (HKEx) which is very much the Hong Kong’s version of the Singapore Exchange.

Just The Tip Of The Iceberg
Market watchers say that the integration of the Shanghai Stock Exchange and the Hong Kong Stock Exchange is but a primer for bigger things to happen. With the assimilation of both markets, the birth of one of the world’s largest stock markets could happen.

While the scheme is currently limited to Shanghai, there is lingering talk that, if proven successful, the scheme may be extended to other Chinese stock exchanges such as Shenzhen.

If that happens, we can look forward to a connect scheme with three exchanges that may be worth over $7 trillion, making it the world’s second largest equity market after the New York Stock Exchange.

Simeon, an LSE graduate, is currently the editor of Aspire. He specialises on topics surrounding trading psychology, politics and macroeconomics.

Please click here for more information about this author.

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