While I am not sure whether or not the following new rule change will cause money flow into Shanghai local A shares to continue, from historical perspective, opening up the financial markets is a big step for China.
"Starting in October, overseas money managers will be able to buy Chinese companies listed in Shanghai via Hong Kong’s stock exchange, some brokerage firms that operate in the region say they are hiring new staff to handle added trading. "
"China’s decision to open its stock market to outsiders goes hand in hand with recent initiatives to liberalize the currency, the yuan, which is also known as the renminbi, and to boost the nation’s influence on the global financial stage. The move will allow mainland Chinese firms to raise money from a wider pool of investors."
"Under current rules, the only way to invest in China is by buying a limited pool of Chinese stocks listed in Hong Kong, or applying for a special license to make purchases on the mainland, a laborious process that takes months to complete. Buying is capped by a quota."
"It’s going to be a game changer in term of international investors getting access to mainland China," Mr. Perrin said. "Having investors willing to put money back to work in China, you need a strong catalyst, and this is potentially the catalyst that China has been waiting for."
Shanghai A50 ETF (2823:HK) has been ahead of this move.