Wednesday, June 13, 2007

A-Share Price Premium

A share and H share trade in two different markets (Shanghai/Shenzhen vs. Hong Kong) and there is no channel to arbitrage, adding to that the huge imbalance between supply and demand of high quality stocks in China has caused most A shares to trade at a premium over their H share counterparts.

The premium ranges from a few percents to several hundred percents when translated into HK$ equivalent.

For ease of reference, I would from time to time publish such table. Stay tuned !


7 Comments:

Anonymous said...

Regarding to the H share discount, I wonder if prices of one A share and one H shares of a company should be the same, only subject to the exchange rate, or they may have a fixed ratio between the two.

thanks

Zhong Siwei 鍾思維 said...

They are 1-to-1.

Apart from that shareholder rights of A share and H share are exactly the same.

Hard to believe such premium?

Anonymous said...

Very interesting table showing the premium of A shares to H shares. Bizarre is probably a better word to use.

I am curious to see how the shares of US-listed Chinese-A stocks compare in terms of premium or lack there of.
Ie. Chalco (ACH) on the NYSE versus Chalco in Hong Kong and Chalco in Shanghai.

Do I simply get a quote for ACH and divide by the HKD-USD exchange rate? I am getting strange numbers. ie. Chalco trades for $42 on the NYSE. This comes out to 5.40 Hong Kong Dollars using an exchange rate of 7.8. But the price you indicate in your spreadsheet says it is trading for 13.70 HKD. What am I doing wrong? I would assume that the NYSE listed stock should equal the Hong Kong listed stock since there are no exchange controls.

Thanks
JP

Zhong Siwei 鍾思維 said...

A share to H share is 1-to-1

For ADR it is NOT.

You need to check the exact ratio. (ie, 1 ADR share = ? H share)

Anonymous said...

Thanks, that worked perfectly.

Is the H share discount something that only appeared recently, say in the last year? It would be interesting to find out exactly when it started to appear.

JP

Zhong Siwei 鍾思維 said...

check out the chart in my new story

http://www.letsthinkchina.com/2007/06/very-important-h-share-index-is.html

u can see the development of the trend

Sanjay John G. said...

Very nice blog. Thanks for giving an update of the premium/discount for H shares and A shares.

I am very bullish on China, and buying the H shares (or in the US, shares as ADRs and FXI, the ETF which has them all) seems to be as close to free money as one can get in life.

Sanjay
www.sanjayjohn.com