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Discounted Hong Kong Shares Rally as Stock Connect Nears

Dual-listed shares that are cheaper
to buy in Hong Kong than Shanghai surged after China pronounced an
exchange couple between a dual cities will start in a week.

Chongqing Iron Steel Co., First Tractor Co. and Dalian
Port PDA Co., whose Hong Kong shares are some of a cheapest
versus Shanghai, any jumped during slightest 16 percent in Hong Kong at
the tighten today. Their supposed A-shares climbed during slightest 0.4
percent in Shanghai. Nine dual-listed bonds fell in Hong Kong
today. The city’s benchmark Hang Seng Index gained 0.8 percent,
while China’s Shanghai Composite Index combined 2.3 percent.

“People are positioning themselves forward of a expected
arbitrage trade when a bond goes live,” pronounced Andrew Clarke, executive of trade during Mirabaud Securities Asia Ltd.
“No one will be offered their A shares in a mainland, they
just might boost their land by shopping a Hong Kong
listing.”

The sell couple between Hong Kong and Shanghai will debut
in a week, regulators pronounced in a corner matter today, giving
foreign investors rare entrance to China’s $4.2 trillion
equity market. The module permits general income managers
to squeeze a net 13 billion yuan ($2.1 billion) a day of
Chinese shares, while also providing a track for affluent
mainland investors to buy Hong Kong equities.

Chongqing Iron Steel’s Hong Kong shares, that trade during a
44 percent bonus to a cost in Shanghai, surged 29 percent
to HK$2.28, while climbing 4.9 percent to 3.20 yuan on the
mainland. First Tractor, during a 49 percent discount, jumped 16
percent to HK$6.08 while rising 0.4 percent to 9.33 yuan in
Shanghai. Dalian Port, with a 47 percent discount, surged 24
percent to HK$3.47. Its mainland-listed shares combined 10 percent
to 5.13 yuan.

Discount Erased

Hong Kong’s Hang Seng Index was valued during 11 times
estimated gain today, compared with 10 on a Shanghai
Composite Index. The Hang Seng China AH Premium index climbed
1.6 percent to 100.83, erasing a market-wide reward of dual-listed Hong Kong shares over their Shanghai counterparts. A
reading of 100 on a sign indicates parity.

Industrial Commercial Bank of China Ltd.’s shares, which
trade during an 8.6 percent reward in Hong Kong, rose 1 percent to
HK$5.05 in a city while adding 2.8 percent to 3.67 yuan in
Shanghai.

“I am certain it is a box of a broader Hong Kong rally, but
I wouldn’t be shopping them if there was a premium,” Clarke said.
“This shows some have not unequivocally suspicion by what is likely
to happen, i.e. premiums and discounts will indeed close, not
grow.”

To hit a contributor on this story:
Anna Kitanaka in Tokyo at
[email protected]

To hit a editors obliged for this story:
Sarah McDonald at
[email protected]
Jim Powell

Article source: http://www.businessweek.com/news/2014-11-09/hong-kong-shanghai-price-gap-narrows-on-stock-connect

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