Mainland funds may flow robustly to HK

Southbound fund flows, from the Chinese mainland to Hong Kong, are expected to grow steadily as investors focus on value investments, according to market analysts.

Geoffrey Wong, head of global emerging markets and Asia Pacific equities at UBS Asset Management, said the second stock connect will not cause an overnight boom of fund inflows, but will lead to a longer term building up process, unless the regulators quickly deregulate restrictions.

He added that foreign fund managers will be looking for some quality companies listed in Shenzhen. At the same time, the Hong Kong equity market will continue to attract southbound flows because some investors will want to switch from assets priced in the mainland's yuan, which has been depreciating in 2016, to assets denominated in the Hong Kong dollar, which is pegged to the US dollar.