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Wenzhou business owners focus on HK stocks

By Yu Ran in Shanghai | China Daily | Updated: 2013-05-30 07:13

"I earned some money from investing in the stock market since I started buying shares in Hong Kong in 2000 with $100,000, which has now increased to $1 million," said Yu Siyi, a shoe businessman from Wenzhou, who started investing in stocks more than 10 years ago and also owns A shares.

All of Yu's clients paid for their orders in dollars, so Yu set up an account in Hong Kong to receive some of the money directly from overseas in 1997.

"The financial manager at the bank offered me certain options to make use of the money and I chose to buy shares in the Hong Kong market, which seemed to be stable and offer long-term returns," said Yu.

Apart from the consulting company, certain banks, stock and futures companies launched departments to allow mainlanders to invest overseas.

"We have helped many clients buy properties and financial products in Hong Kong since 2007," said Shen Liang, a financial manager of the international business department of Wenzhou branch of Agricultural Bank of China.

Shen added that as there is an annual limit of $50,000 for each account, which is a bit low for investors, adding that more people would open accounts if the limit was increased.

Officials at an executive meeting of the State Council led by Premier Li Keqiang said on May 6 that a trial of the qualified domestic individual investor program known as QDII2 would be proactively prepared.

The program, which was launched by the government in 2006, allows Chinese individuals to buy securities in overseas markets through asset managers and funds.

"The individual investor program will attract more Wenzhou businessmen to use their overseas private capital as investment, as nearly 200 billion yuan of the 800 billion yuan in private capital owned by Wenzhou entrepreneurs is overseas," said Zhou Dewen, chairman of the Wenzhou SME Development Association.

Zhou added that regulators should step up their oversight and create multi-layered financial related products that match returns with risks.

However, analysts suggested that investors should still be aware of the risks in the Hong Kong stock market, which has also been affected by the slowdown in the global economy.

"Supported by the US market's strong performance and the European Central Bank's interest rate cut, the Hong Kong market continued its mild recovery in the past two weeks," said Chen Zhizhong, an analyst at China Merchants Securities (Hong Kong).

Chen added that the market was becoming increasingly unattractive to short-time traders.

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