Hong Kong Exchanges & Clearing (0388)

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(07-01-2015, 05:08 PM)weijian Wrote:
(07-01-2015, 09:30 AM)CityFarmer Wrote: Chinese regulators are disconnected from market, by enforcing the rule?

HKEx to reverse Shanghai link’s disappointing performance

SGX's China A50 futures have been booming with the launch of the HKEX-Shanghai stock connect. I wonder whether the improvement in 'efficiency' of the stock connect will persuade existing investors to shift their capital from the derivative products to actual equity itself?

IMO, the key uncertainties that "discouraging" the fund managers, are the ownership and capital tax issues. Unless these issues are cleared, the fund managers will continue to focus on China A50 futures, rather on equity itself.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
More clarify on the capital tax in China. As long as the “temporary” remains, foreign investors will continue to participate indirectly via derivations...

China said to tax past capital gains by international funds

BEIJING (Feb 27): China plans to collect capital gains taxes from foreign money managers that invested in mainland markets during the five years through November 2014, a move that may compel funds to claw back more than US$1 billion from investors to pay the government.

Authorities plan to collect the 10 percent tax on so-called QFII and RQFII funds, according to people with knowledge of the matter who asked not to be identified as they weren’t authorized to speak publicly about the rules.

The levy means managers of public QFII funds may need to claw back US$1.2 billion, an amount that could triple depending on how the levy is calculated, according to research firm Z-Ben Advisors.

The plan brings further clarity to China’s tax policy after authorities said three months ago that QFII and RQFII funds, along with foreign investors using the Shanghai-Hong Kong exchange link, would get a “temporary” tax waiver starting Nov 17, 2014.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
I reckon the concerns of pre-funding and pre-trade delivery, are still keeping the institutional investors away from the direct-link...

HKEx profit up 14% as expected on disappointing stock connect boost

HONG KONG (March 5): Hong Kong's stock exchange operator reported on Wednesday a 14 percent increase in annual profit as expected, with disappointing trading on the stock connect with Shanghai launched in November capping profit growth from the program.

Hong Kong Exchanges and Clearing, as it is formally known, reported a net profit for 2014 of HK$5.17 billion (US$666.64 million), in line with analysts' expectations according to Thomson Reuters data.

HKEx Chief Executive Charles Li has banked on the stock connect program, which allows investors in mainland China to buy Hong Kong shares and vice versa, to boost falling trading volumes in the financial hub.

Daily trading volumes via the scheme, however, have remained lacklustre, due mainly to regulatory and technical hurdles that make the scheme unappealing to many institutional investors.

The exchange's shares have risen 3 percent this year, underperforming the city's benchmark Hang Seng index.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
The new changes will reduce the concern. Let's see the market response, especially from those institutional investors...

HK exchange to upgrade China Stock Connect trading link

HONG KONG — The Hong Kong stock exchange (HKEx) will roll out an upgrade to its equity trading link into China in the next few weeks, something analysts hope will give global asset managers the green light to start using the facility.

Launched in November, the so-called Shanghai-Hong Kong Stock Connect has been hailed as a landmark opening of domestic Chinese markets, enabling international investors to trade onshore equities without a special licence for the first time.

However, due to operational problems with the scheme, many large fund managers have stayed on the sidelines, relying on the long-established quota system for accessing the Chinese market. Activity through the Stock Connect has been lacklustre, with only banks and hedge funds taking part.

The main problems centre on the ownership of securities and the settlement of trades. Investors must transfer shares they wish to sell to their custodian bank or broker before the start of the trading day for the stock exchange to verify that the seller owns the asset.

This gives the custodian temporary legal ownership of the security, increasing counter-party risk for the seller in the event that a custodian unexpectedly runs into trouble. Since the financial crisis, investors have become more cautious about counter-party risk, even if only for a few hours during the execution of a trade.

Trade settlement is also an issue. Currently, buyers take hold of securities on the day of a trade, but sellers must wait another day to receive the cash. Once again, investors, when selling shares, are left exposed to the possibility of counter-party failure.

However, market participants hope a coming operational change — first flagged in January and now in the testing phase — will help fix both issues, paving the way for the world’s largest fund managers to embrace the scheme.

The main change will allow investors to keep their shares, but enable the stock exchange to peer into their accounts to confirm their holdings. That, in turn, will make it possible for most brokers to offer a synthetic early settlement of trades, in effect fronting the cash to sellers a day ahead of receiving it from the buyer.

Currently, this synthetic settlement is available only through the handful of investment banks that have both custodian and equity trading businesses.

“It doesn’t solve all the issues,” said Mr Stephane Loiseau, head of Asian cash equities at Societe Generale. “But everyone is quite bullish that this second version will help, especially for those (institutional) funds that have been effectively barred up to now.”

But challenges for asset managers are likely to remain. Many have mandates that prevent them from investing in the Chinese mainland, so they must redraft these rules before they can start buying through Stock Connect.

A shortage of English-language research on Shanghai-listed stocks is another problem, while legal questions remain over certain shareholder rights, such as being able to sue a mainland Chinese company.

HKEx plans to open a second link into the Shenzhen stock exchange this year and hopes to add other asset classes — such as equity derivatives and fixed income — further down the road. THE FINANCIAL TIMES
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
The new rule might help...

Hong Kong exchange tells investors it will defend them in China

HONG KONG (April 2): Hong Kong Exchanges & Clearing said it will help international investors defend their ownership rights should problems arise amid concerns about Chinese legal protections for shareholders.

The bourse amended its clearing rules last month, committing to provide certificates of ownership to investors who bought shares through Hong Kong’s exchange link with Shanghai.

HKEx said it would also help investors prove their ownership of mainland stocks.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Mainland investors start moving via the HK-SH direct link...

Stock mania spreads to Hong Kong as Chinese buyers hunt bargains

SINGAPORE (April 9): The frenzy that made Chinese stocks the world’s best performers is spilling over the border into Hong Kong.

After propelling the Shanghai Composite Index to a 90 percent rally in the past 12 months, mainland investors are buying as many Hong Kong equities through the exchange link as regulators will allow.

Turnover in the former British colony jumped to a record on Wednesday, volatility surpassed that of Shanghai and the Hang Seng Index surged the most since 2011.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
^^ Bubble up please. The rise after the Feb-March consolidation will add to the belief that the bull market is here.
In addition to the FRESHMEAT coming in the market. I seen this 'movie' back in 90s and 2000s before.
At least have 1 year more to run...bull market started 4Q 2014.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
The link worked unexpectedly, not on north-bound trades, but south-bound trades...Big Grin

Hong Kong Exchanges says China link quota will be expanded

HONG KONG (April 10): Hong Kong Exchanges & Clearing, the world’s biggest bourse operator by market value, expects the trading limits for the equity link with China will be increased.

The exchange had record trading turnover for two days this week as Chinese investors used up their daily quota for buying Hong Kong stocks through Shanghai. They bought 10.5 billion yuan (US$1.7 billion) of shares on both Wednesday and Thursday.

“There will definitely be an expansion,” HKEx’s Chief Executive Officer Charles Li said on Friday in Hong Kong in Mandarin.

“The expansion won’t simply be 20 percent to 30 percent. If there’s an expansion, it must be of a certain magnitude,” of the quota, he said.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
^^ waiting for the free-for-all (N-S or S-N non-index stocks) by this year. Then the bull market will be more fun.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
A further boost to SEHK, with the new link...

China state council said to approve Hong Kong-Shenzhen link

(May 8): China’s State Council has signed off on a stock-trading link between Shenzhen and Hong Kong, said a person familiar with the matter, as global money managers prepare for the next phase in opening up the US$7.3 trillion mainland market.

The program, expected to mimic the Shanghai connect that began in November, will start this year, the person said, asking not to be named as the discussions are confidential.

The link will provide more choice for investors who have an increasing appetite to trade in the world’s second-largest stock market, said Emma Quinn, Hong Kong-based co-head of global equity trading at AllianceBernstein Holding, which has US$474 billion in assets.

“It’s another avenue to access and this has to be a good thing,” Quinn said in an interview in Hong Kong.

“Any way to open that up would be great. We have a lot of products wanting to trade in China.”
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡

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