Shares on the Hong Kong exchange surged 2.5 percent yesterday to
close at 20,979, after the mainland announced on Friday it would
allow qualified domestic institutional investors (QDII) to invest
in overseas stocks.
The rally brought the daily turnover value to a record of HK$95
billion.
The Hang Seng Index jumped 597 points in the morning session to
21,066 points, before closing at 20,979, a 511 point increase from
the last trading day.
The market's two biggest movers, HSBC and China Mobile, gained
1.31 percent and 3.95 percent respectively to close at HK$146.9 and
HK$73.75.
State-owned shares stole the limelight yesterday, with the
mainland company indicator China Enterprises Index (CEI) peaking at
an all-time high of 10,964 points. The index closed at 10,948
points, up 556 points or 5.36 percent.
The CEI's spark pushed all of the index's members upward, with
seven out of 40 members jumping by more than 10 percent. Copper
producer Jiangxi Copper surged 18.9 percent of HK13.44.
A report from Taifook Securities pointed out that the A- and
H-share dual listed stocks would benefit most from the QDII
news.
"Given the large discount in price of the H shares comparing
with the A shares, it seems more capital will flux to Hong Kong to
narrow the discrepancy," the report said.
Joseph Yam, the Hong Kong Monetary Authority's chief executive,
said the increase in spectrum of QDII products will boost the
mainland's capital investing in Hong Kong equities. He expected the
measure to boost the flow of liquidity between the two markets.
However, Ricky Tam, chairman of Hong Kong Institution of
Investors, expects the effect of QDII to fade in the short term.
"But we believe the index is able to climb to 21,500 points in the
future in the light of the strong daily turnover," Tam added.
The China Banking Regulatory Commission last Friday announced it
would allow QDII domestic commercial banks to invest in overseas
equities on behalf of clients invested in wealth investment
products.
The banking regulator launched QDII products last April in hopes
of reducing excessive foreign exchange reserve pressure. The
measure has experienced lukewarm response so far: just 3 percent of
the US$13 billion worth of quotas have been used.
Shanghai Composite Index also rose 0.61 percent yesterday to
4,046.
(China Daily May 15, 2007)