Hang Seng China AH Premium Index, why big individual differences ?

L

luisHK

Hi all

For those familiar with A and H shares, do you have any idea why the premium is so different depending on the stock, quite a few people around have access to both A and H shares, actually with the Shanghai and (soon to be ?) Shenzhen connect, it's most of the overseas investors, also a lot of chinese citizens have overseas accounts that allow them to buy H shares.

Below is a link with the A and H shares listing and their premium, it looks a safe bet to buy the H shares where they are at discount and the A shares when those are at discount, but this looks like too easy. I'm still considering to invest in that direction.
Any input on the topic ?

http://www.aastocks.com/en/stocks/market/ah.aspx
 
Below is the premium distribution from the above link, detailed premium and stock prices are found through the link.
Why are 5 for which the premieum is on H shares, I sure think of buying the A shares for those.


A+H

AH Premium distribution chart
icon_qs.png
SZ Listed AH share SH Listed AH share Show:


H Share Premium > 20% : 0

H Share Premium = 10% to 20% : 1

H Share Premium = 0 to 10% : 4

H Share Premium = -10% to 0 : 4

H Share Premium = -10% to -20% : 14

H Share Premium < -20% : 68
 
Yes I understand the overall spread changes dramatically over time, below is a link to an historival chart, but why is the spread so different depending oin stocks ? At first sight it looks like a great deal to buy the H shares with the highest negative premium and the few A shares witha negative premium, but I suspect there is more to it.
Do you have any idea why a large company like Ping An is quoted cheaper on the Mainland than on HKSE whereas it's the other way around for most chinese companies or why some H shares trade at 60% discount against an average around 20% ?

https://markets.ft.com/data/indices/tearsheet/summary?s=HSCAHPI:HKG
 
what is the short situation there, i know China looks angrily at those who short but there must be aime arbitrage situation to thos who have access to both markets, who are plenty.
Met a guy a couple of times through kid,s school who works on A shares and chinese bonds and is actually setting up a fund trading A shares, i don t dare to ask him too much as he s looking for investors rather than handing out free knowledge but will ask him a couple of questions about this spread next time we talk if he looks in a mood. Unortubae there are not more people in finance around here, that i know at least.
All extra info from this forum will be welcome as well
 
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It is like the China house "bubble" is super crazy, but who knows when it would be reversed and people in China just buy as many as they can by anyway including divorce! They queue to divorce in order to buy house I am not kidding! The crazy housing market in China has been crazy for many years. Same applies to the spread in this post, can you wait for years for the spread "theoretically" reverse? That is the issue.
 
well, i see lots of multimillion usd apartment and house owners in SZ but divorcees are far and few among those, so not so sure about the divorce thing (possible they wouldn t advertise that kind of stratedy but i ve never heard it), but i understand your point anyway, unfortunately i can t say it helps much with my question. Is your opinion that some stocks trade as much higher premium than others because of irrational enthusiasm towards them among ashare traders while others like Ping An are snubbed by mainlanders while H share players are better at seeing their fair value ?Maybe that s the case actually, i m baffled at seeing some trade at 60%discount on HKSE while others trade at 10% discount and a few on premium
 
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luisHK said:
well, i see lots of multimillion usd apartment and house owners in SZ but divorcees are far and few among those, so not so sure about the divorce thing (possible they wouldn t advertise that kind of stratedy but i ve never heard it), but i understand your point anyway, unfortunately i can t say it helps much with my question. Is your opinion that some stocks trade as much higher premium than others because of irrational enthusiasm towards them among ashare traders while others like Ping An are snubbed by mainlanders while H share players are better at seeing their fair value ?Maybe that s the case actually, i m baffled at seeing some trade at 60%discount on HKSE while others trade at 10% discount and a few on premium
More...

Have a look:
http://blogs.wsj.com/chinarealtime/...ouples-rush-to-divorce-to-buy-property-later/

I mean logically it doesn't make sense that the same company has that wide spread price different in two exchanges, but it is also true that the housing price in China has been crazy for so many years. It is hard to measure and predict how does this "crazy trend" would last. I remember I told an ex gf that hk housing price was too high back in like 10 years old and I hope she actually didn't listen to me...I mean the wide spread is just another crazy trend..
 
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GloriaBrown said:
Have a look:
http://blogs.wsj.com/chinarealtime/...ouples-rush-to-divorce-to-buy-property-later/
More...

Interesting, I'd read the market was hectic in Shanghai early this year, as people hoped to emulate Shenzhen real market's 50+% increase last year and find another fast paying market after the stocks' rout but not yet heard of the divorce thing.
On a side note, in Shenzhen, where on last news I read the real estate price was slightly higher than in Shanghai (this might have changed if Shanghai's on fire), and where regulations on house buying are allegedly not as strictly enforced as in Beijing and Shanghai, not only I've never heard of the divorce thing, but the chatter about house prices is nowhere near the one about the chinese stock market a year or so ago when it went almost vertical before crashing nastily, and where everyone seemed interested and confident to invest in it, even some who had previously no experience in it - not that is not an important and recurrent topic, but since I've started coming here, people I know have been invested in real estate and it's been a major source of wealth.
Otherwise I've had a similar opinion as yours for a few years, prices are too high, and so far have been as misguided as yourself.

I'm still curious to read about why the AH spread is widely different among chinese companies' stocks, and how people with access to both markets deal with it.
 
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luisHK said:
Interesting, I'd read the market was hectic in Shanghai early this year, as people hoped to emulate Shenzhen real market's 50+% increase last year and find another fast paying market after the stocks' rout but not yet heard of the divorce thing.
On a side note, in Shenzhen, where on last news I read the real estate price was slightly higher than in Shanghai (this might have changed if Shanghai's on fire), and where regulations on house buying are allegedly not as strictly enforced as in Beijing and Shanghai, not only I've never heard of the divorce thing, but the chatter about house prices is nowhere near the one about the chinese stock market a year or so ago when it went almost vertical before crashing nastily, and where everyone seemed interested and confident to invest in it, even some who had previously no experience in it - not that is not an important and recurrent topic, but since I've started coming here, people I know have been invested in real estate and it's been a major source of wealth.
Otherwise I've had a similar opinion as yours for a few years, prices are too high, and so far have been as misguided as yourself.

I'm still curious to read about why the AH spread is widely different among chinese companies' stocks, and how people with access to both markets deal with it.
More...

That could imply chinese stock market is actually still way above real value but chinese gov doesnt want it to drop much more.
 
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