Shenzhen attracts funds through HK link

Investors are showing stronger willingness to invest northbound, toward Shenzhen using the new Shenzhen-Hong Kong stocks link, according to figures for first full month of trading, as of Thursday. However, market analysts expect that the southbound flows, toward Hong Kong, are likely to be larger in the first half of this year.

In the month from the Dec 5 launch until Jan 4, northbound flows recorded a total turnover of 28.86 billion yuan ($4.2 billion) with an average daily turnover of 1.52 billion yuan - an average daily usage of 6.6 percent of the monthly allowance. Southbound flows saw a turnover of HK$9.9 billion ($1.28 billion) with an average daily turnover of HK$0.5 billion, 3.4 percent of the monthly allowance per day.

Daniel Lo Mun-keung, head of research at Zhongtai International Securities Limited, explained that the Shenzhen market includes more eligible and investable stocks and most of the sectors represent the new economy of China. Investors are attracted to allocating assets in these sectors despite the yuan's depreciation. He added that investors may have used other channels to hedge currency risks.