Shanghai is up 24% YTD while the Hang Seng is down 12%. What’s accounting for the difference in performance and direction?
- Firms listed are different. 2. HK market opens to all the investors but Shanghai ( I assumed here is A share market) only opens to China citizens. 3. The 2009 GDP for China is 8% (if possible) but for Hong Kong is negative.
- Already know that 2. Already know that Doesn’t explain why one market is up a ton while the other market is down a ton.
- The major HK stocks, such as HSBC PCCW, were down a lot but they are not listed in China. These stocks are highly corrleated to US market not China market. Dow Jones dropped like 19% YTD. China market and HK market are very different so shouldn’t be compared with each other.
So why are Chinese stocks up while HK stocks down then. You’ve told me what I already know, that one market is up while the other is down, but you haven’t explained why that is the case. Your #3 is the closest you’ve come to an explanation but if those GDP numbers are already known, expected, and factored into the market I don’t understand what would cause the divergence in performance. Better yet, why is Shanghai up while every other market in the world is down. I don’t buy the mainland-China-is-not-correlated-to-the-world theory, especially on the downside.
BTW, how much experience do you have with posing for calendars?
Those numbers seem strange to me. Without knowing the answer, these are the things that come to mind. 1) How different are the compositions of the index. Is one more export oriented than the other (say HK). Maybe the export dependence is reflected in the HK index more than the Shanghai index. 2) Given that local Chinese only have access to the Shanghai Index, could it be that they are more bullish than the rest of the world, and their bullishness is reflected in SSE prices but not in HK prices? 3) Could the Chinese government be doing things in Shanghai to artificially prop things up, but not in HK? 4) Is something going on with currencies (I need to check this, but does the HK dollar float more than the Yuan?)?
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > So why are Chinese stocks up while HK stocks down > then. You’ve told me what I already know, that one > market is up while the other is down, but you > haven’t explained why that is the case. Your #3 is > the closest you’ve come to an explanation but if > those GDP numbers are already known, expected, and > factored into the market I don’t understand what > would cause the divergence in performance. Better > yet, why is Shanghai up while every other market > in the world is down. I don’t buy the > mainland-China-is-not-correlated-to-the-world > theory, especially on the downside. Shares in Hong Kong can be shorted while shares in Shanghai cannot be shorted. Shares in Hong Kong can be invested by almost anyone in the world while shares in Shanghai are limited to Chinese investors Money/capital leaving China via wire transfer are very hard however, money leaving Hong Kong can be done over the internet those are more than enough reasons as to the variance between the two indexes.
Well, HCSE which indexes the major Chinese companies’ H shares also went up along with their A shares counterpart. The reason why HSI is down is because HSBC and other non-Chinese shares not doing well.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > BTW, how much experience do you have with posing > for calendars? Well. If you do know more about this market, you would know people won’t compare with Hang Seng with Shanghai Index. Instead, they should be Hang Seng China Enterp with Shanghai. Even though there is still premium existing in Shanghai listed stocks. I sure don’t have much experience but just enough to cover both markets.
that was an inside joke about calendars, ignore it. I agree though that the markets are different and there is little point in comparing them. An equivalent question is to ask why China is up and the U.S. is down? Answer that Limo and you have your answer.
So far chadwick (and to a lesser extent ymc) are the only ones who have made an attempt to answer my question correctly. Everyone else is basically telling me that one market is up while the other is down because stocks are up in China and down in Hong Kong.
i think the answer is: index composition is different index accessibility is different.
Great. Anyone else want to repeat what’s already been said a dozen times already?
There are some regulatory restrictions and tax issues on how much you trade in these exchanges that result in significant return differences. http://www.sse.com.cn/sseportal/en_us/ps/about/bi.shtml http://en.wikipedia.org/wiki/Shanghai_Stock_Exchange http://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchange http://211.154.210.238/en/homepage/index_en.jsp
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > Shanghai is up 24% YTD while the Hang Seng is down > 12%. What’s accounting for the difference in > performance and direction? Simply a difference in market sentiment. People in Shanghai are excited to jump in the market after the Chinese New Year because they think the government may do something that saves the already over-heated A shares (whose movement bear no correlation to whatever fundamentals of the economy). The index in Hong Kong on the other hand is exposed to everything that’s going on in this world, i.e. economic slowdown, deleveraging, forced selling etc.
Answer: when I was in SH for new years I told some old lady that I thought now was the time to load up…bigtime. She agreed and obviously told her friends. Duh.
^ironically this answer actually comes closer to the type of answer I was looking for than most of the answers on this thread. jianren11 also had a good answer.
ha, this is easy! This is the year of ox (bull) in China. Chinese (in mainland only have access to Shanghai and Shenzheng index) are be oxish (bullish)!
I cover the region … alot of speculation of goverment intervention forcing their major banks (think 3988.HK/3968.HK/939.HK) to lend money to local fund houses/Investment arms of major comapanies … which is casuing a huge influx of highly leveraged $ into the market. This is not a true reflection of the financial health of the region.