A-share market opened to more investors

Hong Kong, Macao and Taiwan residents living in the mainland have been allowed to trade A shares starting Monday, but experts said the new regulation may have a limited effect in boosting the market in the short term.

Media reports said that currently there are over 450,000 people from Hong Kong, Macao and Taiwan living in the mainland, and most of them are high-net worth people with strong interest in investing in the mainland capital market.

"The new regulation is expected to bring more liquidity to the mainland stock market and also increase transactions," Li Weidong, research director at ChinaVenture Investment Consulting Group, told the Global Times Monday.

The new policy is expected to bring over 10 billion yuan ($1.61 billion) of capital to the A-share market, Shanghai Securities News reported Monday.

Boosted by the news, shares in the country's major securities companies showed a major increase.

Shares in China Merchants Securities Co rose 1.91 percent on Monday, compared with a decline of 0.1 percent in the benchmark Shanghai Composite Index. Hong Yuan Securities Co rose 2.33 percent, compared with a slight increase of 0.54 percent in the Shenzhen Composite Index.

Other securities companies, such as Western Securities Co and Founder Securities Co, also saw their share prices increase on Monday.

"A shares may sound attractive to investors (from those places) as the prices are still at low levels at present … but it will take time to see how much capital the new regulation can bring in to the mainland market," Li noted.

Li Daxiao, research director at Yingda Securities Co, echoed this opinion. "Hong Kong, Macao and Taiwan investors are generally more mature and experienced, so it is not very likely that they will rush to mainland stocks in the short term."

Under the new regulation, investors from Hong Kong, Taiwan and Macao will need to provide their ID cards, mainland travel permits and temporary mainland residency certificates to open an A-share investment account.

But investors in Hong Kong, Macao and Taiwan who do not live in the mainland have also shown enthusiasm for entering the mainland capital market.

"I am very interested in the mainland capital market, as it offers more investment options and growth potential," Carol Lin, a 30-year-old Hong Kong resident who works at the investor relations department at a Hong Kong company, told the Global Times.

Some investors from Hong Kong, Macao and Taiwan had previously started to invest in mainland stocks via their mainland friends, but Lin said that she would prefer to operate the account herself and hopes the government could open the market to all Hong Kong residents soon.

Though China offers investment quotas for foreign institutions, Li from Yingda Securities noted that the government is not very likely to open the mainland capital market to individual overseas investors, at least in the short term.