“It is obvious that the boom was driven by money from China,” said one of those investors, Tan Xin, 35, a banker from Shanghai. Mr. Tan said he had invested in Meitu but cashed out early, selling before the stock peaked.
“I didn’t expect it would be such a high rise,” he said.
China has disrupted the prices of global assets as varied as real estate in Manhattan and copper in London. The latest example is Hong Kong’s stock market, where new programs are allowing Chinese mom-and-pop retail investors to place bets outside mainland China.
Some experts say those investors have played a role in some wild rides. In fact, those experts say, the presence of more mainland Chinese investors has made the Hong Kong market more volatile, adding to pressures that prompted the city’s market officials in recent weeks to publicly defend its stability.
“Hong Kong’s capital market is not a stock casino,” Charles Li, a former investment banker who oversees the local stock exchange, said during a luncheon speech at the city’s Foreign Correspondents’ Club in March. Still, he added, “there’s always going to be a few dark corners and little alleys that ordinary folks don’t usually go in.”
Referring to some new investors from the mainland, he said, “The tourists don’t know better.”
China is slowly and fitfully lowering its financial barriers with the rest of the world, as Beijing tries to balance its desire for stability with its ambitions to have a much greater say in the global conversation about money. Hong Kong’s experience shows that the process could involve spikes, drops and stumbles along the way, as vast sums of money — much of it controlled by people new to global finance — come to world markets.
Two of China’s highest-profile financial liberalization projects involve Hong Kong. In 2014, it introduced the Hong Kong-Shanghai Stock Connect, which allows a total of $3.4 billion to flow between the two markets each day. In December, China doubled down and began another $3.4 billion-a-day program connecting Hong Kong to the stock market in the southern Chinese city of Shenzhen.
Because Hong Kong, a former British colony, operates outside China’s limits on cross-border money flows and has long been a capital of global finance, the programs offered many Chinese investors their first chance to invest in global stock markets.
Money can flow the other way, too. But the stock market crash in China two years ago and worries that its currency could fall in value have turned many overseas investors away from mainland stocks. Rather, the programs are drawing Chinese investors like Alex Nie, who says the mainland’s stock market lacks bargains.
Shanghai and Shenzhen shares “are overvalued,” said Mr. Nie, 37, an employee in the advertising industry in Beijing who has been buying Hong Kong stocks for the last two years and who says he is a long-term investor. “Many are not worth their prices,” he said of mainland valuations.
Many other Chinese stock investors bring a shorter-term mind-set. While private pension funds and mutual funds often steer stock markets in places like the United States, markets in China are more often swayed by amateur investors and well-heeled individuals willing to take big risks.
What China has brought to the Hong Kong stock market is “very much a herd mentality,” said Andrew Clarke, the head of trading in Hong Kong at the Mirabaud Group.
“It’s total speculation,” Mr. Clarke said. “People seize on these names, but it is not a form of investing.” Instead, he added, “Stock Connect becomes the new Shanghai-Shenzhen casino.”
The first Stock Connect deal added a new element of uncertainty to the market, said Rui Huo, a researcher at RMIT University in Melbourne, Australia, who is a co-author of a recent paper on the effect of Stock Connect on volatility.
“Hong Kong Stock Connect has increased the volatility level of both Shanghai and Hong Kong markets,” he said.
Hong Kong has other attributes that encouraged China’s hair-trigger traders. Compared with tightly controlled mainland markets, where stocks are permitted to rise or fall by a maximum of 10 percent a day, Hong Kong has fewer limits, and only on the biggest stocks, meaning hundreds more can double or fall to zero in minutes.
All those factors can work against Chinese investors as well.
Shares of one company, China Huishan Dairy, fell 85 percent in two hours in March. Huishan later announced that it was negotiating interest and debt payments with 23 mainland banks and that all of its independent directors had resigned. The company then added it had filed a missing-person report with the police for its main executive in charge of treasury and cash operations.
Mainland investors were the biggest supporters of the stock the day it crashed, with buy trades from Shanghai through the Connect program accounting for more than a quarter of all turnover in the Hong Kong-listed stock before it was suspended from trading at midday. The identity of the investor or investors could not be determined.
With Meitu, the Chinese app maker, the reasons for the sudden moves were less clear.
Chinese-language reports in Hong Kong in March said the Securities and Futures Commission, the main stock market regulator, had requested the trading records of Meitu from local stockbrokers on three occasions since December, when it raised $629 million in an initial public offering. The stock plunged shortly after the news of the regulator’s actions.
The commission declined to comment. Gary Ngan, the chief financial officer of Meitu, said the company had not received notice of an investigation into the trading or been approached by regulators.
Meitu, which had 520 million active monthly users as of January, allows people to create idealized versions of themselves for sharing on social media. With a swipe, users of the app can whiten their face, taper their jaw, widen their eyes or make themselves thinner. It is hugely popular in China, where the company claims half of all photos circulated on social media were created with the app.
Mr. Ngan said the company had chosen to list in Hong Kong because it was the only place that provided broad access to a base of shareholders from foreign countries and, via the Stock Connect program, from mainland China.
“In Hong Kong, everyone, both in China and overseas, can buy the stock and become our shareholder,” he said.
Still, the whipsaw trading has prompted some concern at Meitu.
“We would have preferred our stock not to be that volatile,” Mr. Ngan said, “because it’s not something that we can control.”