Chinese mainland capital to Hong Kong stock market will soar in 2017: Goldman Sachs

A view of Exchange Square in Central, Hong Kong. [Edmond Tang/China Daily]

HONG KONG - Goldman Sachs estimates net southbound flows from Chinese mainland to Hong Kong via two cross-border stock links will hit $54 billion in 2017, up from $32 billion in 2016, Kinger Lau, chief China strategist at Goldman Sachs, said here on Tuesday.

Southbound net flows have exceeded $8 billion so far this year, outpacing ETF and active flows and becoming the most important source of capital inflows to the Hong Kong market, said Lau.

Since the inception of the first stock link in November 2014, a total of $57 billion of southbound net buying has been recorded, compared with $30 billion for northbound via the two stock links, namely the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, said a Goldman Sachs report.

Goldman Sachs believes one of the reasons for rising southbound flows is long-term asset diversification demand in a scenario where the mainland's per capita income reaches around $10,000 roughly by 2020 based on Goldman Sachs estimate.