[zhoutong]

Except in this case it's the Hong Kong stock exchange with the lower share price. Almost all A-H dual-listed companies are relatively overvalued in A-share market and undervalued in H-share market, and it has been the case for the last 10 years.

There's no effectively way to arbitrage this other than waiting for "all future cash flows" to be realised and discounted to present. It's the same share in the same company, with equal voting and distribution rights, but you just can't take one share bought in Hong Kong to Shenzhen to sell.

Among the Chinese investors, it's commonly accepted that A-share has a price premium because its price is likely to go up more in a bullish market. Given the largely speculative nature of the Shanghai/Shenzhen markets (compared to the more "rational" western-style Hong Kong market), having the same voting and distribution rights is far from enough to cause a convergence in share price.

[Animats]

"Almost all A-H dual-listed companies are relatively overvalued in A-share market and undervalued in H-share market, and it has been the case for the last 10 years."

This may reflect the lower value of non-exportable yuan.

[seanmcdirmid]

China is a huge captive market with few investment options, actually. Your choice is either to figure out how to get your money out into a convertible currency, invest in bubbly real estate, or play in a market with heavy insider trading problems.

[simonh]

>it's commonly accepted that A-share has a price premium because its price is likely to go up more in a bullish market.

Unless the government decides to suspend trading in them, in which case you're stuck with the shares with no way to trade them even if their value drops through the floor. It's market distortions on top of market distortions.