Boston, MA 09/22/2014 (wallstreetpr) – According to Goldman Sachs Group Inc (NYSE:GS), the Hedge funds can probably steer initial demand for the Shanghai-listed stocks via a connection of the city’s stock market with that in Hong Kong. In fact, it will lay open an entirely new channel to buy the Chinese shares for the willing foreign investors, reported the Bloomberg Business Week.
The link to enhance demand:
The head of Asia prime brokerage at the NY-based bank, Shane Bolton, said that the link will increase the demand of the Hedge funds in order to own Yuan-denominated Class-A shares that are traded in Shanghai. He also added that the long-only managers can grab the pre-trade requirements, which are different from the regular method.
Foreign investors to buy $2.1 billion Yuan stocks each day:
Till now the foreign investors could only purchase Yuan shares that were listed in Asia’s second largest stock market via QFII (qualified foreign institutional investors) and the renminbi QFII programs. The new linkage, which will start in the coming month, will help the foreign investors to buy approximately 13 billion Yuan ($2.1 billion) of Yuan stocks every day. According to the September 4, 2014 statement revealed on the website of Hong Kong stock exchange, investors with or without the QFII license, is eligible to buy the Shanghai-traded stocks.
Shane Bolton stated:
Shane Bolton, in an interview, stated that this acted as a game changer in the entire scenario for the Hedge funds, agreeing to give the access to the shares for the first time, even without QFII license.
The demand of QFII quota:
Goldman Sachs Group Inc (NYSE:GS), the prime broker in the Asia-Pacific region, has an approximate $27.4 billion of client assets, which measures 16% of the entire industry. China has allowed 254 financial institutions for a total of $59.7 billion QFII quota while Goldman Sachs has $300 million of QFII quota. Besides, it also holds $600 million quota in its asset management wing. The Hong Kong-based managing director on Goldman Sachs’s top brokerage team, Jignesh Patel, said that even after the connection there will be sufficient demand from long-only managers as well as Hedge funds for the QFII quota.
