The stock markets in mainland China and Hong Kong have continued their frenzy , even as international markets have suffered falls in recent weeks.
On Monday the South China Morning Post reported that the Hang Seng Index in Hong Kong hit a record (23,577) on news that mainlanders would be able to invest directly into the market. H-Shares of mainland companies listed in Hong Kong (which usually trade at a discount to their mainland-traded stocks) saw gains of 6.16 percent in the day – and were up 27.15 percent from August 17.
The mainland money is to be channelled via an initial scheme at Bank of China in Tianjin. Some 40 other cities, including Shanghai, are set to follow. Given the amount of savings looking for a place to invest, and the continuing bubble in the mainland market, access to overseas markets could prove popular, and could also take some heat out of local stocks. However it was also reported that final authorisation for the scheme had not been received by Monday, and that it was not clear who would qualify to invest. China Daily now reports that over a thousand investors have signed up, but that final approval for trading is still to be confirmed.
In other bubble news, a commercial land site in Shanghai has just fetched a record price, at RMB66,927 per square metre. The developers may be an optimistic bunch – but it is not a surprise that they can see plenty of demand in the pipeline.
Meanwhile the Post also reported that China Investment Corp., the state investment agency, may put some of its US$200 billion into domestic blue-chip companies. How this will help diversify foreign exchange investments is not clear, but it could be a sign that initial losses on the US$3 billion Blackstone investment have burnt some fingers – or even that there are local expectations of more RMB appreciation.
There is no shortage of money – just supply of spending options. But can this prevent the boom from going bust?