ETF Strategy AH premium to dissipate? (Credit Suisse)

April 2014

KEYWORDS: China, Hong Kong, Shanghai, stock, United States, ETF, bid-ask spread, exchange, valuation, retail investors

Authors:

Victor Lin

Organizations:
  • Credit Suisse

Summary:
  • China announced yesterday that they would be going ahead with a program that would allow investors on the Shanghai and Hong Kong exchanges to buy stocks from either exchange, subject to quotas.
  • The A and H share types will still not be fungible, but it is still expected that the valuation gap between them will decrease with the mutual access given to investors.
  • For those trading in the U.S., ETFs can potentially be used to profit from the spread tightening between A and H shares.

Related Research and Data