The HK market has been running ahead of itself when it was announced in mid August that the Bohai Branch (Tianjin City) of the Bank of China will be allowed to trade HK stocks for Chinese investors. We were anticipating that all of China can invest in HK stocks either thru the BOC or some other bank as we had expected that other banks will be allowed into the scheme. The announcement put paid to that as it was originally set up as an "experiment" in Tianjin only. The Chinese authorities got cold feet after seeing the response. They were afraid that all chinese investors will go to HK and the China stock market will fall. Stocks that are listed inbothe HK and china, trade at a 60% premium in China.
There is also some turf wars as the tianjin experiemnt was announced by the China Banking Regulatory Commission and the China Securities Regulatory Commission got very upset and warned everyone that it could bring the chinese market down. Of course no one wanted to be the one responsible for causing the collapse of the chinese market and so everyone backed off. The end result may be the collapse of the HK market.
Market Indices
Australia All Ordinaries 6620.10 - 1.58%
Bombay Sensex* 19590.78 - 1.93%
Hong Kong Hang Seng 28942.32 - 5.01%
Japan Nikkei 16268.92 - 1.50%
Shanghai Composite 5634.45 - 2.48%
Singapore STI 3670.18 - 1.21%
South Korea Composite 2015.76 - 0.18%
Taiwan Weighted 9308.60 + 0.38%
*Late trading
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