BUZZ-Another A-H moment in China stocks

Thu Apr 3, 2014 4:40am EDT

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HKEx's discussions with mainland exchanges over mutual market access has turned the spotlight again on the A-shares discount vs their HK-listed peers.

** While no agreement announced yet news comes on the back of series of incremental developments geared towards attracting more foreign money into mainland stock markets.

** HKEx news comes a month after MSCI said it was evaluating including A-shares into its EM indices.

** Recent widening of CNY trading band and further expansion of RQFII/QFII quotas all pointing in the same direction.

** Meanwhile, China stocks' chronic underperformance has taken the A-H premium index back to 2014 lows.

** A-shares starting to nudge ahead of H-shares on 2014 performance.

** Sentiment around EM turning slowly and within that P/E differential between China & EM lowest in more than a decade.

** Risk-reward likely favours going long A-shares, via the iShares FTSE A50 ETF, vs HK-listed China.

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