Hong Kong stocks eye fresh inflows from mainland China’s insurers sitting on US$6 trillion
Volume spike in exchange-traded funds seen as evidence insurers are taking advantage of recent regulator approval to diversify their assets
Hong Kong’s stock market is getting a dose of optimism from mainland China’s 41 trillion yuan (US$6.1 trillion) insurance industry, as some insurers are widely speculated to have bought exchange-traded funds (ETFs) in the city one month after regulators approved such purchases.
Market observers highlighted a spike in trading volume for several Hong Kong-listed ETFs on Monday as evidence of buying by the mainland insurance companies. The National Financial Regulatory Administration, the watchdog of China’s banking and insurance industries, allowed insurers to access Hong Kong-listed ETFs through the cross-border Stock Connect programme last month.
Some Chinese insurers recently received specific rules on investing in the ETFs and may have already started buying, with more industry peers to follow, the China Securities Journal reported on Monday, citing an unspecified source.
The approval of ETF investments is the latest in a series of measures by Beijing to reinforce Hong Kong’s position as a global financial hub. Earlier, it allowed mainland insurers to buy bonds trading in the city and gave permission to commence trading of offshore Chinese government bond futures in Hong Kong. More onshore institutional inflows should support Hong Kong stocks, which have been lagging global peers because of a lack of listings directly tied to the artificial intelligence boom.