(Bloomberg) -- The premium that Chinese stocks command over their Hong Kong-traded peers has narrowed to a five-year low, suggesting that some investors may look to snap up onshore stocks that have become cheaper.
Stocks listed on mainland exchanges, known as A-shares, are now trading at a 27% premium to their counterparts across the border, according to the Hang Seng Stock Connect China AH Premium Index. The valuation gap often widened again when the premium dipped to below 30% in previous occasions.
The CSI 300 Index, a benchmark for onshore shares, has lagged the Hang Seng China Enterprises Index this year, set for the widest underperformance since 2003. While the HSCEI gauge entered a bull market earlier this week, the rebound on the mainland has been much more tepid as the market lacks policy catalysts to draw fresh money.
In the case of some stocks favored by global investors like BYD Co. and Contemporary Amperex Technology Co., A-shares are trading at a rare discount to H-shares, according to calculations by by Bloomberg.