Advertisement
Premium on dual-listed Chinese companies’ domestic shares over their Hong Kong counterparts seen widening in 2024 on policy tailwinds
- On average, yuan-based shares fetched 51 per cent more than their counterparts traded in Hong Kong on December 14, the most in 13 months
- Policy easing measures like cuts in banks’ lending rates tend to have a greater impact on the onshore market, says Morgan Stanley
Reading Time:2 minutes
Why you can trust SCMP
Zhang Shidongin Shanghai
Dual-listed Chinese companies traditionally command higher valuations for their shares on domestic exchanges than their own shares listed in Hong Kong. That premium, currently close to the highest in 13 months, is expected to widen next year on policy tailwinds, analysts said.
Advertisement
On average, yuan-based stock, or A shares, fetched 51 per cent more than their counterparts traded in Hong Kong on December 14, according to the Hang Seng AH Premium Index. That was the biggest price advantage since November 2022.
The gap had fallen back slightly, to 49 per cent on December 22, the gauge showed.
There are 149 mainland Chinese companies with such dual listings, with premiums ranging from 4 to 750 per cent after currency conversion, according to data provider Shanghai DZH.
Hong Kong ranks as the worst performer among major world equity markets this year. The Hang Seng Index has lost 17 per cent, with China’s biggest tech champions suffering another punishing year. The Shanghai Composite Index fell 5.7 per cent, as Beijing’s market-friendly measures tempered losses.
Advertisement
“The withdrawals of overseas funds have played a key role in the rout in Hong Kong,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. China’s fragile economic recovery and US interest-rate increases had also pressured selling, he added.
Advertisement