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Hong Kong stock volumes reach 4 times those of LSE

Stock trading volumes in Hong Kong have climbed to four times that of the main London Stock Exchange, as large technology and healthcare stocks have attracted a growing appetite among foreign investors for “Asia’s Nasdaq.”

Trading volumes in Hong Kong also reached nearly 60% of the New York Stock Exchange, as investors, mostly Chinese, invested around $ 50 billion in stocks listed in the Asian financial center this year.

The average daily turnover of the former British Colony’s stock exchange in the 30 days leading up to February 16 has risen to around $ 25 billion, according to Financial Times calculations based on Bloomberg data, from around 10 billion dollars in the same period a year ago.

This is more than quadruple the average daily turnover on the London Stock Exchange during the same period. Earlier this month, London lost his crown as Europe’s largest equity trading center in Amsterdam. NYSE’s average daily revenue was $ 44 billion.

Hong Kong hosted the bumper this month $ 5.4 billion enrollment Chinese viral video app and competitor of TikTok Kuaishou, the world’s largest technology initial public offering since Uber in 2019.

“The exchange is quickly becoming regarded as the Nasdaq of Asia thanks to continued tech listings that attract new capital to Hong Kong,” said Angus Richardson, co-director of pan-Asian execution services at Citigroup.

Including other trading venues, London’s average daily trading volumes in February were around $ 9.5 billion, according to data from Cboe Europe.

Hong Kong brokers say the city’s business boom this year has been largely influx of mainland Chinese Investors. Many have focused on collecting Hong Kong-listed stocks, which are valued at a significant discount to those that trade on the mainland.

The increased liquidity for mainland traders could also provide more depth to the Hong Kong market, a major drawdown in its battle with the New York stock exchanges to capture a greater share of the lucrative Chinese IPOs.

The surge in trade volumes in the city also occurred despite political upheaval following Beijing’s introduction of a sweeping national security law last year.

“Hong Kong has had a tough 18 months, but the surge in trade shows investors believe it could ease and Hong Kong will be on the path to growth,” said Richardson.

Hong Kong’s benchmark Hang Seng is up nearly 13% this year, in part due to optimism China’s economic recovery of the coronavirus pandemic, compared to less than 5% for Wall Street’s S&P 500 and London’s FTSE 100.

“All of the new volume that we’ve seen on the rise is primarily from investors from the south,” said Andy Maynard, a trader at China Renaissance investment bank in Hong Kong, referring to mainland Chinese buyers.

Line chart of the Hang Seng Stock Connect China AH Premium Index showing that onshore Chinese stocks are priced at a premium over Hong Kong stocks

Chinese investors can buy and sell Hong Kong stocks through Stock Connect programs with Shanghai and Shenzhen. Through the links, mainland Chinese investors have bought net $ 49.1 billion of Hong Kong-listed shares since the start of the year, according to FT calculations, up from around $ 8 billion a year ago. year.

Maynard said mainland Chinese investors’ share of daily revenue in Hong Kong had doubled in recent weeks to around 30%.

Brokers and bankers said a wave of high-profile secondary listings by Chinese tech groups also injected more liquidity into the Hong Kong market. The lists coincided with the moves to expel Chinese companies US stock exchanges unless they follow US accounting rules.

“Normally you would tell customers not to secondary advertise because [the liquidity] would all come back to primary exchange, ”said a banker at a major Wall Street investment bank. “But now there are enough Asian investors who are unwilling or unable to trade in the United States, and therefore are more comfortable in those markets.”

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