Steady southbound inflows buffer HSI from market shocks and global bearishness

Stock purchases from Mainland investors were able to offset bourse losses following a US slump.

Bloomberg reports that a steady stream of southbound capital inflow from exchange links in Shanghai and Shenzen are able to act as a buffer against volatile market conditions plaguing Hong Kong's stock market. 

This was particularly evident as the $1.6b stock purchases from Mainland investors via southbound links were partially able to narrow the losses of the Hang Seng Index from 2.7% to 1.1% following a decline in the US stock exchange, indicating that strong southbound liquidity is more than able to protect the bourse from market shocks and global bearishness. 

"Southbound liquidity is supporting the market and they’re concentrating on buying Chinese financial companies because of their discount," said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. 

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