China plays surge on talk of Beijing easing fund rules
China plays surge on talk of Beijing easing fund rules
Rumours swirl that China may soon let its funds invest in markets like S'pore
By Goh Eng Yeow, Markets Correspondent
SHARES of Chinese companies listed in the Republic soared on an adrenaline rush yesterday, following rife speculation that China would soon liberalise its rules to allow its funds to buy into overseas markets such as Singapore.
This caused several popular China counters such as shipbuilder Cosco and sports wear maker China Hongxin to race to record highs.
Dealers attributed the surge to a report by United States investment bank Merrill Lynch, which said an approved China fund had been given the mandate to buy the overseas-listed shares of firms that derive at least 50 per cent of their revenues in China.
'If this is true, it is something very significant, because when the same thing was allowed for Hong Kong, the Hang Seng Index shot up like mad,' said a remisier.
Yesterday's buying sent the PrimePartners China Index, which tracks China companies listed on the Singapore Exchange, up by 6.4 per cent to 280.05 points.
Some individual counters registered far bigger gains. Frozen dumpling maker Synear Food rose an eye-popping 16.9 per cent to $2.07, while soybean products firm Celestial Nutrifoods gained 17.2 per cent to $1.43.
RELATED LINKS
RED-HOT INTEREST
Since last month, when China said it would allow its citizens to buy directly into the Hong Kong market, the Hang Seng Index has surged by nearly 40 per cent from its August low.
Yesterday, interest in Chinese firms listed in Hong Kong stayed red-hot, rising 2.4 per cent.
Investors are hoping for a similar run-up in Singapore, as Beijing eases restrictions on overseas investments to cool the speculative bubble in the overheated Shanghai market and relieve the upward pressure on its currency.
Such a liberalisation would also mark a big improvement of the scheme, first announced by China in May, to let its banks invest their clients' money in stocks or structured products in Hong Kong through a Qualifed Domestic Institutional Investor (QDII) scheme.
Merrill identified the fund as the 'to-be-launched Jiashi QDII fund which will focus on all overseas Chinese equities, including those listed in Singapore, the United States and other markets'. It is one of the seven fund management firms approved by the China authorities under its QDII scheme.
While it has not raised any money so far, the fund is expected to be open-ended and targeted at retail investors investing as little as 5,000 yuan (S$994).
Besides fund management firms, China had also approved 21 domestic banks under the QDII scheme to invest a total of US$16.1 billion (S$24 billion) in Hong Kong shares and structured products.
Merrill said it expects about US$4.8 billion to flow from the mainland into the Hong Kong stock market by next year. 'This would represent about 7.4 per cent of the current free float of Hong Kong-listed China stocks.'
It reckoned China fund management firms would be able to raise US$30 billion in funds by the end of next year, half of which is expected to be earmarked for investing in the Hong Kong stock market. The remainder may flow to markets including Singapore.
'We believe it is time to explore stocks in these markets, including Synear Food, Yangzijiang and Wuxi Pharma,' said Merrill.
Rumours swirl that China may soon let its funds invest in markets like S'pore
By Goh Eng Yeow, Markets Correspondent
SHARES of Chinese companies listed in the Republic soared on an adrenaline rush yesterday, following rife speculation that China would soon liberalise its rules to allow its funds to buy into overseas markets such as Singapore.
This caused several popular China counters such as shipbuilder Cosco and sports wear maker China Hongxin to race to record highs.
Dealers attributed the surge to a report by United States investment bank Merrill Lynch, which said an approved China fund had been given the mandate to buy the overseas-listed shares of firms that derive at least 50 per cent of their revenues in China.
'If this is true, it is something very significant, because when the same thing was allowed for Hong Kong, the Hang Seng Index shot up like mad,' said a remisier.
Yesterday's buying sent the PrimePartners China Index, which tracks China companies listed on the Singapore Exchange, up by 6.4 per cent to 280.05 points.
Some individual counters registered far bigger gains. Frozen dumpling maker Synear Food rose an eye-popping 16.9 per cent to $2.07, while soybean products firm Celestial Nutrifoods gained 17.2 per cent to $1.43.
RELATED LINKS
RED-HOT INTEREST
Since last month, when China said it would allow its citizens to buy directly into the Hong Kong market, the Hang Seng Index has surged by nearly 40 per cent from its August low.
Yesterday, interest in Chinese firms listed in Hong Kong stayed red-hot, rising 2.4 per cent.
Investors are hoping for a similar run-up in Singapore, as Beijing eases restrictions on overseas investments to cool the speculative bubble in the overheated Shanghai market and relieve the upward pressure on its currency.
Such a liberalisation would also mark a big improvement of the scheme, first announced by China in May, to let its banks invest their clients' money in stocks or structured products in Hong Kong through a Qualifed Domestic Institutional Investor (QDII) scheme.
Merrill identified the fund as the 'to-be-launched Jiashi QDII fund which will focus on all overseas Chinese equities, including those listed in Singapore, the United States and other markets'. It is one of the seven fund management firms approved by the China authorities under its QDII scheme.
While it has not raised any money so far, the fund is expected to be open-ended and targeted at retail investors investing as little as 5,000 yuan (S$994).
Besides fund management firms, China had also approved 21 domestic banks under the QDII scheme to invest a total of US$16.1 billion (S$24 billion) in Hong Kong shares and structured products.
Merrill said it expects about US$4.8 billion to flow from the mainland into the Hong Kong stock market by next year. 'This would represent about 7.4 per cent of the current free float of Hong Kong-listed China stocks.'
It reckoned China fund management firms would be able to raise US$30 billion in funds by the end of next year, half of which is expected to be earmarked for investing in the Hong Kong stock market. The remainder may flow to markets including Singapore.
'We believe it is time to explore stocks in these markets, including Synear Food, Yangzijiang and Wuxi Pharma,' said Merrill.
posted by Alex at
2:34 AM
0 Comments:
Post a Comment
<< Home