A month after China opened up its equity markets in a landmark trading link with Hong Kong, demand has been subdued and the bulk of activity has come from short-term speculative investors.
The authorities had hoped mutual and pension funds and private banks would form the bedrock of the Shanghai-Hong Kong stock connect. But early trade volumes in the program launched in mid-November were completely dominated by hedge funds and banks' proprietary trading desks, according to five traders at some of the biggest brokerages participating in the scheme.
Regulatory hurdles have kept out a large swathe of the investment community - and the steady business the financial industry and regulators had hoped they would bring - despite a sizzling stock market rally on the mainland.
Market players say it could take months for long-term investors to eventually trickle into the program, as they devise ways to cope with its peculiarities.
"We are not participating in the scheme yet because of the operational issues that have yet to be resolved and we prefer to access the mainland markets via exchange traded funds," Robert Cormie, Asia CEO of BMO Private Bank, told Reuters.