HK, Shanghai stock markets diverge
The surging Hang Seng Index closed above 30,000 for the first time, underscoring the diverging fortunes of the Hong Kong market and its once-stellar mainland counterparts, which slumped for a second week.
Betting that the US Federal Reserve will cut interest rates next week and that local banks will follow suit, Hong Kong investors pushed the blue-chip index to a record 30,405.22 yesterday, a 3.19 per cent gain for the week.
By contrast, the Shanghai Composite Index slid 3.9 per cent, to 5,589.63, during the week as punters fretted that the nation's central bank was about to increase borrowing costs for the sixth time this year to control runaway economic growth.
Mainlanders, who have driven the Shanghai index up 108 per cent this year, are losing confidence in home markets and increasingly turning to Hong Kong. The Hang Seng has soared 49 per cent since a scheme - dubbed the 'stocks through-train' - allowing mainlanders to invest directly in Hong Kong-listed shares was announced in August.
'More mainland money is coming to Hong Kong and driving the market,' said Nicholas Yeo, an investment manager with Aberdeen International Fund Managers.
The two markets, which have climbed in record-breaking lockstep for most of the past three months, are diverging amid fears that the fastest- growing major economy could be facing a boom-to-bust scenario. The Shanghai Composite has slipped 8 per cent from its record high on October 16 amid concerns that inflation will devalue investment returns.
