The State Administration of Foreign Exchange (SAFE) is examining the possibility of creating an A- and H-share arbitrage platform, after the proposal was made last month by several Shanghai and Hong Kong market specialists, the South China Morning Post reported. SAFE director Hu Xiaolian commented at the National People's Congress meeting this week that the platform would benefit the capital market. The proposal will allow investors in Hong Kong and Shanghai to trade shares in the 39 companies listed in both markets and so reduce the gap in prices between the A- and H-shares of the same company. At present, most A-shares are traded at a premium to their H-share counterparts. The issue has surfaced more recently as an increasing number of companies traded on one side of the border cross over to list on the other side.
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