Stocks News
- HK share-purchase program delayed
Date: 6-Sep-2007 Sources: (Shenzhen Daily)
THE government will hold off from allowing local investors to buy Hong Kong shares directly until rules have been introduced to limit capital outflows, according to three officials at the country's banking regulator.
The State Council blocked the introduction of the share-purchasing program, announced by the State Administration of Foreign Exchange (SAFE), after concerns were raised by the securities and banking regulators, said the officials, who asked for their names not to be published. Shares listed on the two stock exchanges in Shanghai and Shenzhen have quadrupled in the past year and valuations are triple those in Hong Kong.
'A risk assessment is necessary,'' said Zuo Xiaolei, chief economist at China Galaxy Securities Co. in Beijing. 'Mainland investors may rush to buy stocks in Hong Kong.''
Hong Kong-listed shares are surging on speculation mainland households will pour some of their 17 trillion yuan (US$2.3 trillion) of savings into the city's equities once restrictions are relaxed. Hong Kong's Hang Seng Index has climbed 18 percent since SAFE's announcement, while the Hang Seng China Enterprises Index, which tracks the so-called H shares of 41 mainland companies listed in the city, has jumped 31 percent.
Restrictions on China's currency, the yuan, prevent individuals from investing overseas. The government is loosening controls as record trade surpluses drive up the foreign-exchange reserves and complicate efforts to cool the world's fastest-growing major economy.
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