China is encouraged to invest in HK-listed state stocks with forex reserves to boost stock market

From The Standard: 2024-07-10 15:10:38

Veteran investor Chan Sun-sun is urging China to use its Exchange Fund to invest in stocks of Chinese state-owned enterprises (SOEs) listed in Hong Kong. He suggests converting some of China’s US dollar reserves into Hong Kong dollars to boost the stock market, citing recent moves by the People’s Bank of China to reduce US dollar assets amid US-Sino tensions. Chan believes this move could stabilize Hong Kong’s peg regime and state-backed company share prices.

As China tightens measures to maintain stability in the mainland stock market, they will suspend securities lending, raise margins, and tighten high-frequency trading. The CSI 300 Index in mainland China and Hang Seng Index in Hong Kong have both declined by over 7% and 11%, respectively, from this year’s peak on May 20. Chan hopes China’s central government will consider his proposal to prevent further market turmoil and safeguard Hong Kong’s role as a financial hub.



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