Bulls Go Missing In Options For Hong Kong?s Bourse Operator
By Kana Nishizawa and Jonathan Burgos
Investors are running for cover from declines in shares of Hong Kong?s bourse as a rout in Chinese equities curbs trading in the city?s stock market.
Bearish bets on Hong Kong Exchanges & Clearing Ltd., the worst performer last month on the city?s benchmark index, became the most expensive in three years relative to bullish wagers, data on one-month options show. The average daily value of equities traded on the exchange fell about 36 percent in July from April.
The Hong Kong market has been the victim of a selloff in mainland stocks that has wiped out about $3.5 trillion. Chinese shares listed in Hong Kong slumped the second-most among 93 global equity gauges in July, with only Shanghai doing worse, and the benchmark Hang Seng Index slid for a third month. Hong Kong?s bourse, which outpaced the city?s equity rally earlier this year, is slumping even more on the way down.
?Investors may be speculating HKEx shares will drop if turnover keeps decreasing,? said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. in Hong Kong. ?People are more defensive right now about the market as investor confidence has been affected. Demand is increasing for puts.?
The Hang Seng Index sank 14 percent from its peak in April through Monday, while HKEx tumbled 31 percent during the period. The bourse operator had surged more than 70 percent from March 27 to a peak in May, making it among the world?s most valuable stock-exchange operators. The city?s benchmark index climbed 15 percent in that time. HKEx rose 0.2 percent as of 1:31 p.m. local time on Tuesday, while the Hang Seng Index slipped 0.2 percent.