Chinese Buying HK Stocks to Avoid Yuan Depreciation

Bloomberg: In Rush to Exit Yuan, China Traders Buy Sinking Hong Kong Stocks
Chinese investors are so desperate to shift their money out of yuan-denominated assets that they’re piling into some of the world’s worst-performing stocks.

Mainland buyers purchased Hong Kong shares through the Shanghai stock link for a 10th week last week, even as the Hang Seng Index tumbled 6.7 percent.
The premium in A-shares argues for owning H-shares over A-shares in most cases. As for depreciation, domestic shares might be a better choice if there's a flight out of cash in China. There are also domestic options such as this one: 国泰纳斯达克100(QDII-ETF) (513100), the Nasdaq-100 ETF. Of course Nasdaq has to rise, but that's a U.S. dollar asset that has no direct yuan currency risk.

I mentioned it back on September 7 as an option, it closed at 1.46 that that day. Today it closed at 1.512, for a gain of 3.5%. ChiNext is up about 10% since then, minus about 3% depreciation in CNY. Key point for buying Hong Kong shares though:
Because it’s a closed-loop design -- Chinese investors get the proceeds in yuan when they sell Hong Kong shares -- purchases don’t count toward an annual limit on moving money offshore, Citigroup said.
This make senses if the company in question has foreign assets and earnings, otherwise not so much.

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