Shanghai And Hong Kong Will Gradually Reduce The AH Share Price Difference

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According to common sense, under the condition of relatively uniform market rules, funds will flow to the valuation depression of the same company.

As a result, the valuation level of the two cities A+ H shares has been leveled out, which will also be the most direct impact brought by the Shanghai and Hong Kong Exchanges.

By the end of September 26, 2014, the Hang Seng AH share premium index was 98.09 points, up 1.57% from the previous week, and the A share fell to 1.91% compared with the H-share overall discount.

The Hang Seng AH share premium index, which reflects the price difference between Mainland and Hongkong listed in July 9, 2007, is introduced in July 9, 2007. The weighted average premium of A shares relative to H-shares is calculated based on the market value of the shares of the constituent stocks and H shares calculated according to the included index.

The higher the index, the more expensive A shares are relative to H-shares.

In 2008, when the A stock bubble was at its peak, the index rose to 213.47 points.

As market participants gradually became more geographically, the premium for A shares began to decline significantly from 2010.

Since the announcement of the joint announcement by the China Securities Regulatory Commission and the Hongkong Securities Regulatory Commission in April 10th this year, it is announced that the discount mechanism of A shares will be narrowed in the concussion during the 6 months since the pilot of "Shanghai Hong Kong stock market trading interconnection mechanism".

Data show that the day before April 10th, the Hang Seng AH share premium index was 93.69 points, that is, the A share price is 6.31% higher than the H-share price, and the 25 shares of A shares have a discount than H shares.

Among them, the discount rate is headed by conch cement, and the discount rate is 27% on the day.

Correspondingly, a total of 59 shares of H-share have a discount compared with A shares, of which the highest discount rate is Zhejiang Shi Bao, with a discount of 80% on that day.

In April 10th, after the announcement of the approval of the Shanghai and Hong Kong pilot project, AH's stock price quickly climbed to the limit of Anshan Iron and Steel Co., Ninghu Expressway and conch cement.

Morgan Stanley's Asia and emerging market strategy director said that Shanghai and Hong Kong through mechanism will create a "one China" market, "the price of A shares and H-shares will be integrated, and the gap will eventually disappear."

After April 10th, the Hang Seng AH share premium index was once in a downward trend, and dropped to 88.72 at the lowest level in July 24th, creating a new low for many years.

However, as Shanghai and Hong Kong approached the pace, the index began to gradually increase. In September, 26 daily 98.09 points, the overall discount of A shares compared with H shares has been reduced to 1.91%.

Insiders say

Just like a pool of holes between the two pools with different water heights, the Shanghai Stock Exchange and Hong Kong stocks began to gradually adjust to the same price target.

Shanghai securities research report said that in the 86 AH shares that have been listed, most A shares were higher than H-shares.

From the comparison of issuing price, the valuation level of H-share issuance is relatively low, the issuing price is low, and the growth space of the latter market is bigger. A shares issue high price and high price earnings ratio overdraw the future growth space.

But from this year's A share issuance market performance, this trend is in the process of regression.

At the same time, the two places

Through a more convenient and safer paction, Shanghai and Hong Kong will help A shares improve their closed trading environment and further closer to the rational investment concept in the international market.

For investors in Hong Kong stock market, we can share the stable income brought by the high economic growth in the mainland through this channel.

Although there will be a long process, AH share price is a big probability event.

Hong Kong and Shanghai international managing director and chief strategist hung Hao wrote that Shanghai and Hong Kong will gradually press the price difference between the mainland and Hongkong. In the long run, this policy will gradually open channels between the two capital accounts, thus forming an important step in the internationalization of RMB.

The internationalization of RMB and the gradual opening of capital account are an important condition to eliminate the valuation discount of China's stock market. In other words, this policy can make the overseas market recognize the undervaluation of the Chinese market and make the undervalued value of the Chinese market finally return to its reasonable valuation interval.

Ping An Securities believes that

There may be convergence, and the valuation of the industry and the company may also be further closer to the reference system of global investors.

However, due to market recognition and preferences, as well as institutional differences, it is decided that the valuation of A shares will not be identical with Hong Kong stocks.

At the same time, due to the influence of market system and policy intervention, and capital liberalization is not yet fully open, the characteristics of A share's "independent market" will continue. Because of the short-term change of the dominant pattern of individual investors and the localization characteristics of external funds manifested by QFII, the relative risk preference characteristics of A shares are still difficult to change.