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The Future of SHKSC; Opportunities For Investors
Aspire, Thought Leaders | 04 May 2015
By: Louis Wong
Articles (12) Profile

After surging 52.9 percent last year, the Shanghai Composite Index posted gains of about 26 percent in 2015 year to date. Margin loans of outstanding in Shanghai and Shenzhen reached 1.7 trillion yuan, two and a half times higher compared to six months ago.

Is the rally a bit too fast and are there any signs of overheating? In the upcoming Shares Investment Conference 2015 Mid-year Review, I will be giving a diagnosis of China’s bull market, checking for any symptoms of a “mad cow disease” that may impede the bull run.

Although China’s bull market continues to rage, the economy shows further signs of weakening, for instance, first-quarter GDP growth slows to 7 percent, the lowest since the financial crisis. What is the impact on corporate earnings?

Will PBOC Cut Rates And RRR Further?

In order to prop up the economy, the People’s Bank of China (PBOC), China’s central bank, had cut interest rates in November 2014 for the first time in more than two years. Additionally, in February this year, the PBOC lowered the reserve requirement ratio (RRR), the amount of cash that banks must hold as reserves, to help spur bank lending and combat slowing growth. Will there be more interest rate cuts and RRR reduction this year?

Investment Opportunities SHKSC Can Offer

Source: South China Morning Post

Since the launch of the Shanghai-Hong Kong Stock Connect (SHKSC) in November last year, enhancements have been made to the programme, such as allowing international investors to short-sell Shanghai A shares and permitting mainland mutual funds to invest in Hong Kong shares via the SHKSC.

Further enhancement like increasing the investment quota, expanding product variety and investment scope, relaxing limitations on investor qualification are expected. There is in view of the anticipation for the upcoming Shenzhen-Hong Kong Stock Connect. What investment opportunities will it bring to international investors?

Furthermore, HKEx is reported to have held initial talks on a possible stock link between Taiwan and Hong Kong. With more cross-border bourse links being materialised, HKEx will undoubtedly be the biggest beneficiary. Its share price has more than doubled since June last year. Will there be more upside?

China has accelerated reform to liberalise its capital and foreign exchange market. Its economy is poised to be more open and China’s A shares are poised to go global. There will be tremendous opportunities for you to grab.

Louis will be speaking at Shares Investment’s upcoming MYR 2015 event. Details of that event can be found here.

Louis is one of the most experienced fund managers in Hong Kong and has more than 25 years of solid experience in the financial markets. He employs a strict criteria for choosing his stocks, which is deeply insistent on having a thoughtful and sophisticated analysis of the company before making any investment decision.

Please click here for more information about this author.

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