What do Chinese investors know that global investors do not?
Shares of Chinese companies dual-listed in Hong Kong have put on a spurt in recent months and are up more than 13 per cent since March. These stocks are freely tradable by foreigners, who have responded warmly to a recent pick-up in inflation, improving exports and a move by the central bank to free up lending to small businesses.
But the equivalent shares listed in Shanghai – mostly off-limits to non-Chinese – have barely budged. For most of the past few years, these so-called A shares have traded at a premium to the H shares in Hong Kong. But since last November – when China set out on a new, more moderate growth path – the Shanghai shares have generally traded more cheaply. This week the A-share discount reached its widest level in eight years.