Record outflows from northbound trading in SZ-HK stock connect
inventory market picture: Xinhua
Greater than 7.three billion yuan ($1.06 billion) flew out of the Shenzhen inventory trade beneath the Shenzhen-Hong Kong Inventory Join on Wednesday, setting a file amid international market volatility.
The historic outflow got here throughout a time of excessive uncertainty within the international monetary markets, on account of the coronavirus outbreak and an oil worth shock, and the capital outflow could signify a short-term bleak view of China’s inventory market, in keeping with Dong Dengxin, director of the Finance and Securities Institute on the Wuhan College of Science and Know-how.
“The efficiency of China’s inventory market was stronger than different markets on the planet final week, regardless of the fears and considerations over the coronavirus outbreak,”Dong mentioned, “however whereas many are speaking about it as if it is the subsequent protected haven, there are nonetheless short-term volatility dangers.”
Undermined by steep oil worth drops and weak demand following the coronavirus outbreak, main inventory market underwent upheavals. The Cboe Volatility Index (VIX), which measures market fears, spiked to its highest intraday stage since 2008 on Monday.
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To date this 12 months, the S&P500 index has dropped 10.eight p.c whereas the Shanghai index is down 1.four p.c, in keeping with Reuters.
“Nevertheless, in opposition to the background of worldwide uncertainty, buyers, particularly non-public buyers, will get out and in of China’s market extra often, and it’ll positively encourage extra dip consumers,” Dong mentioned.
Other than market volatility, the quick outflow additionally resulted from the straightforward entry to the Shenzhen-Hong Kong Inventory Join scheme, in keeping with Dong. The low threshold for buyers to enter means a lot of non-public buyers are out there, who are usually much less secure than institutional buyers.
