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China stock market most favoured by Hong Kong investors

Nearly 31% of the surveyed respondents said they are likely to invest in China equities if interest rates are reduced further this year.
Fund Selector Asia

“After the second interest rate cut in March 2015, the stock market has slowly regained momentum,” said Karen Cheng, vice president of private bank distribution.

“We have witnessed a surge in both mainland and Hong Kong stock markets in recent weeks, which once again proves policy support from the Chinese government is a strong driver of market sentiment.”

Nearly 60% of the respondents expect the People’s Bank of China to cut interest rates in the second half of the year.

If interest rates are cut again, about half the respondents (47%) said they would prefer investing in H-shares and 45% said they will invest in both H- shares and A-shares.

The PBoC started easing its monetary policy stance in November last year, when it slashed the interest rate for the first time in two years.

This was followed by a series of monetary policy measures, the latest one being last week’s 100 basis points cut in reserve requirement ratios for banks. 

Market analysts and managers last week said further easing measures are still needed to support economic growth.

Local market confidence dips

Investor concerns were reflected in the the JP Morgan Investor Confidence Index in Hong Kong, which stood at 111 for the January-March quarter compared to 117 for the October-December quarter.

“It is understandable that investors showed concerns in the first quarter because of the uncertainties in China,” Cheng said.

“Volatility of the mainland stock market has an impact on nearly half of the investors’ investment strategies and 39% are concerned about RMB [renminbi] depreciation. 

“We believe this dip in confidence will only be short-lived since other investor attitudes remain positive.”

The March survey was based on responses from 500 retail investors who had at least five years of continuous investment experience and held liquid assets in excess of HK$100,000 ($12,903)

Part of the Mark Allen Group.