Financial analyst Castor Pang said today the ripples of the continuing stock sell-off in China are being felt deeply in Hong Kong because the city’s and Shanghai’s markets are interconnected.

“The main reason the Hong Kong market is going down is because these two markets [Shanghai and Hong Kong] have high correlation, with many mainland companies listed in both,” said Pang.

Hong Kong benefited from the start of April when Chinese authorities relaxed rules on southbound trading for mainland investors using a stock link-up between the city’s exchange and Shanghai.

“A lot of Chinese investors who are trading through the stock connect are trying to withdraw money from Hong Kong,” said Pang, adding that share value in many smaller firms was dropping more than 20 percent a day.

If the sell-off continued, it would become a “chaotic situation” said Pang, head of research at Core Pacific-Yamaichi.

Hong Kong stocks tumbled by 4.20 percent in the morning session today, buffeted by a rout in Shanghai and fears of a Greek eurozone exit. The Hang Seng Index sank by 1,049.22 points to 23,926.09 by the break on turnover of HKD107.28 billion.

Words: AFP

Photo: Reuters



Done selling all your stocks? Watch Coconuts TV!

Grove: Coconuts Brand Studio

Fast. Funny. Digital. We produce creativity that delights and influences customers. Join forces with us to slay buzzwords, rise above the noise, and sow the seeds of something great.