A/H share convergence
Siwei Zhong
Daniel
helpful. Great that you are having this group now.
Daniel
it's A share that was Overvalued. Unfortunately there is no short-sell
allowed in Shanghai, otherwise H price will be a good benchmark.
Siwei Zhong
what I am doing is to LONG H-shares. In fact I am buying H-share
index fund 2828 and its call warrants.
just look at today SH dropped 3% and HSCEI index only dropped by less
than 1%. Earlier this month when SH dropped by total of 20% during
the correction HSCEI was going up in the opposite direction !
I have already sold all my positions in A-share related ETF.
> > > How are you planning to profit from this trend? Let's discuss !- Hide quoted text -
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Siwei Zhong
know...
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Siwei Zhong
discuss further here !
joyr...@gmail.com
H Share? It seems you have to set up a trading account in HK in
person - is there another way to do this without having to be in
person in HK? Thanks!
On Jun 21, 9:52 am, Siwei Zhong <letsthinkch...@gmail.com> wrote:
Siwei Zhong
check it out.
Daniel
I agree with your point that A,H convergence is underway. (Your
observation on Mr Tsang is quite interesting to me).
One of your assumption is not very clear to me: A share down 30%, H
share up 70% of the current premium.
A simple example from your current list is from the holdings of FXI:
Datang Power, which has a P/E ratio 21.77 at H market, is traded at 38
at A market. I wouldn't expect 70% to apply to this stock.
Personally I am quite bullish about Chalco. Almost half the price of A
market, with a very modest P/E ratio at 13.23. (although it is quite
premature opinion because I didn't have time to read its 10k).
In summary, I am suspicious whether the current holding of FXI, mostly
banks/Insurance and energy (with a quite high p/e ratio already at H
market) will gain substantially. Chalco and Sinopec look more
promising.
On Jun 21, 9:52 am, Siwei Zhong <letsthinkch...@gmail.com> wrote:
Zhong Siwei
my 30/70 assumption across the board was quite arbitrary.
should have applied different assumption to each stock in the list.
as i mentioned my strategy is to buy H index and overweight certain individual stocks, so I don't bother to dig deeper into the analysis, anyone interested can copy my excel and work deeper from there. FXI is for US investors who do not have access to HK trading a/c.
Is E*Trade offering HK trading in US? I've seen their advertisement several months ago.
I like Chalco too. almost bought it during the Feb correction and I regret very much now.
I plan to buy some SINOPEC too.
how you do find SH Pechem at 61% discount ? with a privatization concept too.
SHall also look at red chips which are not on the A/H list.
if u r intereted to study more one good source of info is http://www.caijing.com.cn/
this is a must-read for all HK and china analysts who follow china stocks.
Zhong Siwei
it's just FXI can capture better this particular A/H convergence wave.
for me as i can access to Hk stock, if i am to play a-share i would rather buy A-50. ( 2823.hk) which tracks SH index better than CAF. CAF is still almost 20% lag behind SH index.
I like your blog. Unfortunately I just bought CAF recently. Should I sell all of them and buy FXI instead or maybe sell paritial to hedge ? thanks
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michael k.
As always, excellent and useful information in your post. Thank you
for taking time to educate all of us!
I looked at your calculations and was surprised at some of the results
re FXI. You calculated an aggregate discount of 10.96% for the H
shares in FXI. If you extrapolate the discount over the entire fund,
you get a discount of 27.7% (10.96% divided by 39.55%).
I had always been under the general impression that H/RC shares are
trading at approximately a 50% discount to A shares, based on PER.
For example, the Bloomberg article today on the China market stated
that the CSI 300 has a PER of 43 (based on "reported earnings", so
probably TTM). The iShares webpage reports a PER for FXI of 22.6 (I
believe this is also TTM). This implies a PER "discount" of about
47%, which is much larger than 27.7%.
I know that this comparison is not precise, because it cover stocks
that are not listed on both markets. But, it would seem a reasonable
approximation of the valuation gap between the two markets.
So, I would assume from the above that the aggregate PER of A shares
without H share listings are significantly higher than those with H
share listings. The very high PERs of the A shares without H share
listings, combined with the relatively lower PERs of dual listed
shares, results in the aggreate CSI 300 PER of 43.
Does this seem like a correct conclusion?
I'm sorry to raise such a complicated question. But I think this type
of information is vital in trying to predict how much FXI is likely to
rise as the valuation gap between HK shares and mainland shares
narrows.
Siwei Zhong
pls don't say 'educate'... i am not even a qualified professional.
about your question, i believe a simple answer is that FXI only holds
the largest 25 firms, while CSI300 covers a number of much smaller
companies with much higher PE giving a higher overall PE.
i've not looked at the detail composition of CSI300 (i only mainly
keep track of SH Composite daily), however the following numbers do
tell a bit about the difference between SH and SZ listed stocks:
SZ mkt cap is 1/3 of SH
Shanghai Shenzhen
No. of listed stock 893 646
Total cap (RMB/b) 13,345 3,869
Average Mkt Cap per stock (RMB/b) 14.9 6.0
Siwei
> >http://www.LetsThinkChina.com- Hide quoted text -
michael k.
Thank you for your comments. That certainly makes sense.
One more minor comment. Shouldn't your FXI upside be 8.3% [.077/(1-.
077)], because you are moving up from the lower number, not down from
the higher number?
michael k.
BOOM.COM accounts by mail. As you probably know, this is a HK-based
internet brokerage service. Once you have the account, you can trade
H and other shares and ETFs on the HK stock exchange as well as many
other international exchanges.
The BOOM.COM webpage does not clearly state what nationalities may
open an account. Perhaps, they want to avoid explicitly soliciting
foreigners to open accounts, because of securities regulations. So, I
do not know if there is any problem with Chinese nationals like
yourself opening an account, because if it is OK, I assume many
mainland Chinese would want to open accounts by mail.
nnyljh
Siwei Zhong
I don't even know it is still running.
I would not recommend it.
if Etrade is offering service in July you may want to wait
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nnyljh
Thanks for the helpful info on BOOM.COM. I agree it's probably not a
good idea.
I am waiting for E-Trade to open up their global trading platform but
in the mean time, do you recommend any reputable brokerages with good
internet trading capabilites? My brother-in-law in heading to HK soon
and I may ask him to open accounts there.
Rgds,
John