Northbound Flows Dominate the Stock Connect

One reason may be the financial media, which focused on stocks that foreigners would want to buy in China, rather than attractive stocks in HK.

Closer Look: Why Shanghai-Hong Kong Stock Connect Was One-Way Road
Investment funds around the world have about US$ 20 trillion to buy stocks, and even if they allocate only a small part of those assets to China, foreign investments in A-shares would soar because the QFII, the main channel linking foreign capital with the Chinese market, has allowed less than US$ 50 billion into the market, he said.

It also appears that foreign investors have more capital ready to enter the Chinese market than the Chinese have to invest overseas. Data from Chen show that the amount of QFII and RQFII (the QFII's yuan-denominated version) investments combined with overseas-listed Chinese stocks' value is 28 times that of qualified domestic institutional investors' investment into overseas-listed stocks.

"From this it can be inferred that the two sides have a gap in terms of capital strength," he said.

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