As China’s Investors Rush In, Hong Kong Shares Take a Wild Ride

“It is obvious that the boom was driven by money from China,” said one of those investors, Tan Xin, 35, a banker from Shanghai. Mr. Tan said he had invested in Meitu but cashed out early, selling before the stock peaked.

“I didn’t expect it would be such a high rise,” he said.

China has disrupted the prices of global assets as varied as real estate in Manhattan and copper in London. The latest example is Hong Kong’s stock market, where new programs are allowing Chinese mom-and-pop retail investors to place bets outside mainland China.

Some experts say those investors have played a role in some wild rides. In fact, those experts say, the presence of more mainland Chinese investors has made the Hong Kong market more volatile, adding to pressures that prompted the city’s market officials in recent weeks to publicly defend its stability.

“Hong Kong’s capital market is not a stock casino,” Charles Li, a former investment banker who oversees the local stock exchange, said during a luncheon speech at the city’s Foreign Correspondents’ Club in March. Still, he added, “there’s always going to be a few dark corners and little alleys that ordinary folks don’t usually go in.”


Shares in Meitu, which makes a popular smartphone app for airbrushing selfies, jumped 80 percent in a week after mainland investors piled in.

Jason Lee/Reuters

Referring to some new investors from the mainland, he said, “The tourists don’t know better.”

China is slowly and fitfully lowering its financial barriers with the rest of the world, as Beijing tries to balance its desire for stability with its ambitions to have a much greater say in the global conversation about money. Hong Kong’s experience shows that the process could involve spikes, drops and stumbles along the way, as vast sums of money — much of it…

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