Chinese Shares’ Premium to Hong Kong Peers Poised for 2020-Low

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John Cheng

Wed, Mar 19, 2025, 6:48 PM 1 min read

(Bloomberg) -- The terms spread betwixt mainland China stocks and their counterparts listed successful Hong Kong is poised to scope a much than four-year low, arsenic optimism successful artificial quality drives investors to the city’s market.

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A measurement of onshore shares’ premium to their Hong Kong peers is adjacent to surpassing an October-low, bringing it adjacent the lowest level since June 2020. This comes arsenic a gauge of Chinese firms listed successful Hong Kong surged 24% this year, portion the mainland benchmark CSI 300 Index lone gained 1.5%.

Tech giants listed successful Hong Kong are benefiting from a DeepSeek-driven rally, portion sentiment toward onshore shares remained capped by a brushed economical recovery. The fiscal hub’s outperformance is besides helped by beardown buying from mainland investors.

To beryllium sure, Beijing’s plans to boost depletion whitethorn trigger a reversal of the trend. After months of mostly outflows, a $2.5 cardinal exchange-traded money tracking the largest and astir liquid stocks successful mainland China saw its biggest inflow this week since October.

In the longer term, the premium “could beryllium little than successful the past owed to expanding southbound ownership successful Hong Kong, which is present astatine a akin level compared to overseas progressive funds’ ownership,” UBS Group AG strategists including James Wang wrote successful a note. Some level of premium should stay fixed the higher liquidity and turnover successful Hong Kong, arsenic good arsenic the deficiency of quality to abbreviated onshore shares, they said.