SHANGHAI: The Hong Kong stock market, which reopened on Tuesday after a public holiday, ended flat as excitement toward chipmaking overcame jitters around Beijing’s crackdown on illegal cross-border trading.
Shanghai stocks dipped as tech shares corrected, but big investment banks led blue-chips higher on bets they will benefit from regulators’ clamp-down on brokers moving Chinese money offshore without a license.
China on Friday launched an industry-wide crackdown on illegal cross-border investment, and punished online brokers Tiger, Futu and Longbridge.
The campaign, which requires a wind-down of illegitimate trading accounts in two years, could affect as much as HKD294 billion (USD37.53 billion) in Hong Kong, Kaiyuan Securities estimates.
Yuan Yuwei, hedge fund manager at Trinity Synergy Investments, said China’s tighter capital control could hit Hong Kong-listed small-caps, but the impact on the broader market would be limited.
“I believe we are still in a big bull run underpinned by hard technology,” he said.
Hong Kong’s Hang Seng Index swung between losses and gains before ending the session flat.
China’s blue-chip CSI300 Index rose 0.5 percent while the Shanghai Composite Index dropped 0.2 percent.
An index of Hong Kong small-caps - which are vulnerable to reduced liquidity - fell 2 percent. Shares of Bright Smart, a small broker in Hong Kong, tumbled 5 percent.
But China Securities Co jumped 4 percent in Hong Kong and 6 percent in Shanghai. Other major Chinese investment banks, including China International Capital Co and China Galaxy Securities
also rose sharply.
“Demand for global asset allocation will persist, but increasingly shift toward compliant channels,” Guotai Haitong Securities said in a report, recommending major brokers with a global footprint and stakes in top mutual fund companies.
Mood in Hong Kong was also aided by a frenzy around chipmaking, after Chinese tech champion Huawei Technologies said on Monday it will make industry-leading semiconductors using a new technology in five years.
An index tracking Hong Kong-listed chipmakers surged 6 percent, led by Chinese chip giants Hua Hong Semiconductor and Semiconductor Manufa cturing International Corp.
“I’m very bullish toward SMIC. It’s China’s answer to TSMC,” fund manager Yuan said, referring to the Taiwanese chip foundry.
“SMIC’s strategic importance is even greater than companies like PetroChina and CATL.”
In China, tech shares corrected after Monday’s jump.
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