Following the cryptocurrency ban in mainland China, investors have started to actively enter Hong Kong's equity markets seeking alternative investment opportunities.
Entry of Mainland Investors in Hong Kong
Mainland Chinese investors have begun actively investing in Hong Kong's equity markets as a workaround following the cryptocurrency ban imposed in 2021. Demand for assets surged after Guotai Junan International broker received a license for virtual asset trading, triggering a buying frenzy.
Impact of License Approvals on Stocks
After receiving the virtual asset trading license, Guotai Junan International's shares skyrocketed, placing the company at the top of the Hong Kong Stock Exchange by total trading value. However, in the following days, it slipped behind Xiaomi, which launched its electric car.
Development of Stablecoins and Their Significance
In June 2023, Hong Kong passed a stablecoin bill, providing a boost for Hong Kong firms connected to cryptocurrencies. Morgan Stanley’s economist Robin Xing noted that China's interest in stablecoins could be driven by concerns over dollar dominance. Furthermore, the Governor of the People's Bank of China, Pan Gongsheng, highlighted the potential use of stable digital currencies to address existing payment system weaknesses.
Interest in crypto assets and stablecoins in Hong Kong is growing, creating new investment opportunities for mainland Chinese investors despite the ongoing crypto ban in the country.
