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Global stock markets have suffered great turbulence recently. While the major markets in Europe, North America and Asia-Pacific are gradually being restored to a relatively stable situation after a substantial breakdown, uncertainty still makes many investors anxious.

Some have described the recent collapse of stock markets as a disaster, which may potentially trigger another round of financial crisis and economic recession globally. This gloomy scenario will no doubt have strong implications for Hong Kong. My own view is rather different. Compared with most of the major markets in the world, Hong Kong's stock market has proved its resilience. It has yet to see any sign of an outflow of large amounts of capital. Therefore, I believe the decline of the local stock market was just a knee-jerk reaction to falls on global markets. Investors in Hong Kong need not panic. On the contrary, investors who have ample cash should consider the current correction in share prices as an opportunity to enter the market.

Crises often come with opportunities. At present, the Price-to-Earnings (PE) ratios of many Hong Kong shares are quite low, and some shares with a low PE ratio are strongly performing companies which also have a track record of satisfying payout ratios. These companies have great prospects, so it could be more rewarding to invest in their stocks now, especially when compared with their counterparts in other markets.

We should also pay attention to the direction of future international capital flows. During economic booms, investment opportunities are abundant, and investors never lack options. As a result, stock markets will not be the sole destination of money flows. However, when the global economy is fraught with uncertainties as it is now - with no visible direction in the horizon - investors will scramble for a safe haven to harbor their excess cash. Hong Kong's stock market is potentially a haven for risk-averse investors.

My optimism for the Hong Kong stock market has not sprung out of thin air. It is well supported by the fact that Hong Kong enjoys three major advantages: The city's proximity to the mainland, the world's second-biggest economy; an efficient financial regulatory system; and a fully open market with no restrictions on capital flow. The more fluctuant the global stock markets are, the more obvious the superiority of the Hong Kong market appears to be.

The recent market upheaval has also reminded many investors of the differences between the Hong Kong and mainland markets in terms of their regulatory systems. The Shanghai Stock Exchange Composite Index of the Shanghai bourse surged to a peak slightly above 5,100 points merely two months ago, causing widespread euphoria among those involved in the market. But at the end of June, the index plummeted sharply after the deleveraging process started. Now the index is hovering around 3,000 points. The 40-percent drop in share prices has resulted in the biggest ever loss in market value globally.

The trickiest problem with the mainland stock market is that regulatory intervention remains a key factor for share prices, and the regulatory system frequently needs updating. There is also a lack of transparency in the operations of listed companies. These are a cause of worry for investors. As for mainland investors, a great portion of them are plagued by a herd mentality, with insufficient knowledge and understanding of the market. Hence, they tend to follow others and react to market fluctuations emotionally. This has contributed to the volatility of the mainland market. I believe there is still a long way for the mainland stock market to go before it becomes as mature as the Hong Kong market. The relevant authorities should have learnt a lot from the current market upheaval.

(China Daily 09/14/2015 page9)