Investor Presentaiton
48.
The increase in participation from European investors (excluding UK) may
relate to the changing landscape in the EU securities markets with the transition
to united pan-European capital market and the efforts made in Europe to fund
pension liabilities; these factors may have stimulated larger-scale overseas
equity investment. Unlike US investors who may trade ADRs in many Hong
Kong stocks in their own country, European investors may mostly prefer to
trade directly in the Hong Kong market.
Among Asian investors, Singapore is the largest contributor while Mainland investors
have an increasing share.
49.
50.
51.
52.
Singapore was the largest Asian origin for overseas investor trading in both
cash and derivatives (respectively 9% and 16% in 2002/03). Trading may
come from a number of international fund houses that have their regional fund
management operations based in Singapore and invest considerable amounts in
the Hong Kong market.
The contribution from Mainland China investors to the cash market turnover
increased for the fourth consecutive year to 8% of overseas investor trading in
2002/03. Their contribution to the derivatives market turnover also grew but at
a slower rate (7% of overseas investor trading in 2002/03 from 5% in 2000/01).
Further growth of the contribution from Mainland China is anticipated. It has
been reported that rules for allowing Qualified Domestic Institutional Investors
(QDII) to invest overseas are underway 18; and that the State Council has
approved a plan to allow the National Social Security Fund to invest up to
RMB5 billion in overseas markets, including Hong Kong¹.
The contribution from Japanese investors remains relatively low (below 5%)
after the Asian financial crisis; and that from Taiwanese investors has also been
low in the past two years.
Cash and derivatives investment from overseas are likely to be related.
53.
From the similar distribution of market trading by overseas origin in
respectively the cash and derivatives markets, it is likely that overseas investor
participation in the cash market and that in the derivatives market are related to
each other (Chart 8).
Chart 8 - Composition of Overseas Investor Trading by Origin in the Cash and Derivatives
18
Source: Hong Kong Economic Journal, 7 June 2004.
19
Source: Hong Kong Economic Journal, 5 March 2004.View entire presentation