--- title: Analysts Gloomy on Hong Kong’s Exchange After Shenzhen Link description: Analysts Gloomy on Hong Kong’s Exchange After Shenzhen Link --- ![websites-group](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/new-MMG-01.svg) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-new-marketsmedia-logo.svg)](https://www.marketsmedia.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-traders-redlogo.svg)](https://www.tradersmagazine.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-bestexe-logo.svg)](https://www.bestexecution.net/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-fidesk-logo.svg)](https://www.fixglobal.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-fixglobal-new-logo.svg)](https://www.fixglobal.com/) - [*Facebook*](https://www.facebook.com/MarketsMedia/) - [*Twitter*](https://twitter.com/marketsmedia) - [*Linkedin*](https://www.linkedin.com/company/markets-media-llc) - [Newsletter](https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link#popup-newsletter) #### Want the latest news on securities markets -- FREE? Sign up to receive exclusive articles on topics including: - Equity market structure - Profiles of buy-side investment firms - The evolution of multi-asset-class trading - Regulation and its implications for markets - The search for liquidity in fixed income markets - The convergence of fintech and capital markets Select one or more newsletters you would like to receive: menu [![Markerts media](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/header%20logo.svg "Markerts media")](https://articles.marketsmedia.com/) - [Fintech](https://articles.marketsmedia.com/tag/fintech) - Fintech - Analysts Gloomy on Hong Kong’s Exchange After Shenzhen Link Search - [Home](https://articles.marketsmedia.com/) - [Trending](https://articles.marketsmedia.com/tag/trending) - [Featured](https://articles.marketsmedia.com/tag/daily-email-feature) - [Sectors](https://articles.marketsmedia.com/tag/sectors) - [From The Markets](https://articles.marketsmedia.com/tag/from-the-markets) - [AWARDS](https://articles.marketsmedia.com/tag/events) - [Newsletter](https://awards.marketsmedia.com/newsletter-sign-up) - [Newsletter](https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link#popup-newsletter) Hide search Search - NewsLetter ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/trading-up-occ-iex-select-board-members-citadel-lands-lieblich-573x379-Jul-07-2022-09-34-11-57-AM.jpg) [ON THE MOVE: Citi Hires Artie Ambrose;...](https://articles.marketsmedia.com/on-the-move-citi-hires-artie-ambrose-natalie-a-brown-to-mesirow) ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/Depositphotos_445735906_L.jpg) [Trading Adapts to ESG and Sustainable...](https://articles.marketsmedia.com/trading-adapts-to-esg-and-sustainable-investing) ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/iStock-917493152-Jul-07-2022-09-34-19-09-AM.jpg) [Focus on FX Execution Connectivity](https://articles.marketsmedia.com/focus-on-fx-execution-connectivity) ![](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/Depositphotos_333839538_L.jpg) [TRACE Turns 20](https://articles.marketsmedia.com/trace-turns-20) 08.24.2016 By John D'Antona Fintech # Analysts Gloomy on Hong Kong’s Exchange After Shenzhen Link 08.24.2016 By John D'Antona [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link) (This article originally appeared on Bloomberg) Hong Kong Exchanges & Clearing Ltd.’s outlook hasn’t improved despite last week’s official announcement of a trading link with Shenzhen, according to analysts. The proportion of sell recommendations is at its highest level since 2013, according to data compiled by Bloomberg, and price estimates suggest an 8.3 percent stock decline in the next 12 months. Daily turnover, which jumped last week, is declining, and shares have fallen 5.4 percent in a week through Tuesday, when the stock traded without the rights to a dividend. Research notes published after the Aug. 16 unveiling of the Shenzhen link draw a glum picture, as analysts were left unsurprised by the long-awaited approval: Goldman Sachs Group Inc. said there is now an absence of positive news flow around the company, while Citigroup Inc. said the link was possibly the last catalyst for the exchange. “There’s no more optimism in the short term — the last piece of good news has been announced,” said Daniel So, a strategist at CMB International Securities Ltd. in Hong Kong. “Market turnover at these levels cannot support its valuation. I expect 20 percent downside from here by the end of this year.” The connect program with the Shenzhen Stock Exchange will give investors a wider selection of stocks for cross-border trading. HKEx shares had climbed 3.4 percent in the week leading up to the announcement. Daily turnover on Hong Kong’s main exchange averaged HK$85.4 billion ($11 billion) last week, about 28 percent more than this year’s average, according to data compiled by Bloomberg. Investors will likely have to face the reality that turnover won’t increase as much as they expect, Tony Tanaka, an analyst at Haitong International Securities Group, said in a report on Aug. 19, cutting his rating to sell from neutral. Turnover was HK$60.8 billion on Tuesday. HKEx dropped 0.3 percent to close at a six-week low on Wednesday. Bullish to Bearish In the days before the Shenzhen link was announced, prices for bullish bets relative to bearish ones on HKEx were increasing to their highest in more than a year, according to data compiled by Bloomberg. The so-called skew has since been reversing course. “People use options largely for short-term speculation — so it could be buy on rumor and sell on facts,” said Tony Chu, a Hong Kong-based money manager at Sophus Capital. Shenzhen connect is “just like the Shanghai connect, it’s small. It’s not a big earnings driver.” With the Shanghai link contributing to just 1.3 percent of HKEx’s total revenue in the first half of the year, the new link won’t have a large impact, Citigroup analyst Darwin Lam wrote in a report on Aug. 16. Earlier this month, HKEx said first-half net income declined 27 percent compared to the year-ago period on lower trading. With the stock at 34 times estimated earnings, it’s among the most expensive compared to its global peers. ### Upgrade, Downgrade It was a different story when the Shanghai link was announced in April 2014. The news spurred a wave of analyst upgrades that month, although downgrades followed the program’s commencement in November. About 47 percent of analysts tracked by Bloomberg are now recommending investors sell the shares, compared with 29 percent a year ago. Lorraine Chan, spokeswoman for HKEx, declined to comment on analysts’ opinions. “Shenzhen connect only marks another milestone in the first phase of our mainland mutual market access plans,” said Chan. HKEx will benefit from capital flow as mainland markets open up, Michael Wu, an analyst at Morningstar Inc., wrote in a report on Aug. 16. Exchange-traded funds are likely to be allowed in the stock link program next year, and there are plans for more bonds and stocks to be included in the mutual market program, HKEx Chief Executive Officer Charles Li said in a briefing last week. While authorities didn’t give a start date for the link with Shenzhen, which has been expected for more than a year, HKEx said last week preparations for the launch will take about four months. Daily limits will be the same as for Shanghai’s, 13 billion yuan for orders going north to the mainland and 10.5 billion for southbound traffic. The connect will also include small-cap companies listed in Hong Kong that have a market value of more than HK$5 billion. “People might have had higher hope on the basket of eligible stocks and on the expansion of daily trading quota too,” said Francis Chan, a Bloomberg Intelligence analyst. “Demand for stock connect has been limited. It’s unlikely that Shenzhen stock link will make a material difference for HKEx.” [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/analysts-gloomy-hong-kongs-exchange-shenzhen-link) ![email](https://articles.marketsmedia.com/hubfs/Markets%20Media/email.svg) ### NEWSLETTER SIGN UP And receive exclusive articles on securities markets ### Related articles 1. [![](https://articles.marketsmedia.com/hs-fs/hubfs/Imported_Blog_Media/trading-across-the-pond-Jul-07-2022-09-33-17-07-AM.png?width=376&height=250&name=trading-across-the-pond-Jul-07-2022-09-33-17-07-AM.png)](https://articles.marketsmedia.com/eu-achieves-electronic-trading-of-standardized-otc-derivatives) Regulation ## [EU Achieves Electronic Trading of Standard OTC Derivatives](https://articles.marketsmedia.com/eu-achieves-electronic-trading-of-standardized-otc-derivatives) ISDA warns on proposed changes to post-trade deferrals regime. 07.07.2022 By Shanny Basar 2. [![](https://articles.marketsmedia.com/hs-fs/hubfs/Imported_Blog_Media/iStock-522304914-Jul-07-2022-09-33-41-28-AM.jpg?width=376&height=250&name=iStock-522304914-Jul-07-2022-09-33-41-28-AM.jpg)](https://articles.marketsmedia.com/six-digital-exchange-collaborates-with-fireblocks) Fintech ## [SIX Digital Exchange Collaborates with Fireblocks](https://articles.marketsmedia.com/six-digital-exchange-collaborates-with-fireblocks) The partnership will focus on delivering an institutional custody solution for digital assets. 07.07.2022 By Shanny Basar 3. [![](https://articles.marketsmedia.com/hs-fs/hubfs/Imported_Blog_Media/Depositphotos_103566932_L-2.jpg?width=376&height=250&name=Depositphotos_103566932_L-2.jpg)](https://articles.marketsmedia.com/iosco-publishes-crypto-asset-roadmap) Regulators ## [IOSCO Publishes Crypto-Asset Roadmap](https://articles.marketsmedia.com/iosco-publishes-crypto-asset-roadmap) The IOSCO Fintech Task Force will collaborate closely with other international bodies. 07.07.2022 By Shanny Basar [![MarketsMedia](https://articles.marketsmedia.com/hubfs/MarketsMedia.svg "MarketsMedia")](http://marketsmedia.com) - [About us](https://www.marketsmedia.com/about-us) - [Careers](https://www.marketsmediagroup.com/careers) - [Contact](https://www.marketsmediagroup.com/contact) - [Advertise](https://www.marketsmediagroup.com/advertise) - [Newsletter](https://awards.marketsmedia.com/newsletter-sign-up) - [Corporate Site](https://marketsmediagroup.com) - © 2026 Markets Media Holdings LLC - - Terms & Conditions - Privacy Policy {{ standard\_footer\_includes }}