Beijing’s market stabilization efforts have pushed the premium of mainland A-shares over Hong Kong-listed H-shares to the highest level in nearly 17 months. The Hang Seng Stock Connect China AH Premium Index reached 33%, marking its strongest monthly gain since January 2024. While both markets face weak earnings, state-backed buying has cushioned mainland equities, whereas Hong Kong remains more exposed to global risk sentiment and AI sector volatility.
Analysts expect the valuation gap to persist as foreign investors pull back and mainland investors reduce Hong Kong exposure. Net outflows from Hong Kong stocks hit HK$20 billion ($2.6 billion) this month, the largest since 2021. The widening spread is fueling arbitrage trades, with investors shorting Hong Kong shares and buying Shenzhen-listed counterparts, particularly in firms like Contemporary Amperex Technology Co. Ltd. (CATL), whose H-share premium has halved since June.
Bearish bets on offshore shares have doubled to 26% since May. Strategists caution that without new policy or macro catalysts, offshore tech listings may face further headwinds, sustaining the premium divergence.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing