Article in Bloomberg: "Chinese Flock to Hong Kong for Stocks They Could Buy at Home"
As mainland brokers tighten margin financing amid increased regulatory scrutiny, Hong Kong securities firms are finding a niche catering to Chinese investors. Amid the world’s biggest stock rally, a 141 percent one-year gain, the business presents a means to compete with bigger Chinese rivals who have been expanding in the city.
Investors in Hong Kong, including mainland visitors, have put 154 billion yuan ($25 billion) into Shanghai-traded equities since China began allowing purchases through the link in November.
Charles Li, CEO of Hong Kong Exchanges and Clearing Ltd., said he was unaware of how much money originated in Hong Kong or how much was round-tripping from China.
“These are just investors in Hong Kong, and I don’t care how they’ve got here,” he said in an interview. “Why I would single them out?”
Stephen Qin, a 28-year-old office worker in northern China, traveled 1,000 miles and set up an account in Hong Kong to trade Chinese stocks he could have bought at home.
“I can make more money if I can borrow more,” said Qin. “That’s why I chose Hong Kong.”
Something tells me this has to end badly, but the million dollar question is: when?