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A rout in Chinese stocks listed in Hong Kong intensified on Monday, pushing their discount to mainland peers to the deepest in fifteen years in the latest sign of growing pessimism among international investors. The Hang Seng China Enterprises Index fell 2.4%, inching closer to a level last seen almost two decades ago, while the onshore benchmark CSI 300 Index finished 1.6% lower. As a result, a gauge tracking mainland stocks’ price premiums over their dual listings in Hong Kong rose to the widest since 2009.
The steeper losses in Hong Kong, where some of China’s most influential and innovative firms are listed and Beijing’s interference is less felt, paint a more worrisome picture of global
investor sentiment toward the world’s No 2 economy. The continued selloff in Chinese shares looks even more glaring against the backdrop of a more optimistic Wall Street, where the S&P 500 Index climbed to a record last week.
The extended weakness also came after China’s commercial lenders kept their benchmark lending rates unchanged, a move that follows the central bank’s recent decision to maintain borrowing costs but may have disappointed investors hoping for more aggressive stimulus.
“Quite a large number of HK share investors are overseas institutional funds and they have reallocated from Hong Kong to Japan and other Asian markets in their Asian allocation,” said Redmond Wong, market strategist at Saxo Capital Markets HK, referring to Hong Kong-listed stocks. “Some mainland institutional investors may have more restrictions on how much they can unload and they also tend to have a home bias.” Chinese stocks listed in Hong Kong are often regarded as a better barometer of the health of the world’s second-largest economy and a more accurate gauge of broader investor sentiment.