Hong Kong--Hong Kong stocks stormed to seven-year highs under a new policy that allows Chinese investors easy access to the city's bourse, but while analysts say the rally has some way to go they warn it will be tempered by cooling measures from a nervous Beijing.
Buoyed by hopes of China stimulus to support a slowing economy, mainlanders have been making the most of easier restrictions on a cross-border exchange link-up to flood into the southern city after a year-long rally in Shanghai that has doubled its value.
The rally in the Hang Seng Index resembles the explosion in Hong Kong's property market, which has seen prices soar as flush mainlanders pour in.
But Hong Kong shares fell 2.02 percent Monday after China last week tightened financing rules for margin-trading while allowing fund managers to lend equities for short selling. On Tuesday they bounced back, jumping 2.79 percent.
The moves were seen as a bid to stem speculation by the mostly private retail traders north of the border who have borrowed vast sums to make a quick profit.
However the China Securities Regulatory Commission insisted the new rules were not designed to cool the market, but to foster stable development.
AFP
