November 17th is going to be an exciting day for Canadian investors – The Shanghai/Hong Kong Connect is set to launch! This will integrate two previously unconnected exchanges. This is no paltry moment- here is the creation of potentially the second largest exchange in the world, with a combined market capitalization of US $7 trillion dollars and an annual turnover of US $9 trillion. International investors will be able to invest in 568 companies on the Shanghai Stock Exchange.
First thing to note though, is there are 3 types of shares on the SSE – A-shares, H-shares and B-shares. B-shares listed on mainland Chinese exchanges in foreign currencies, and are often less important. He important ones to note are A-shares, which are domestically traded shares in Shenzhen and Shanghai, and H-shares, which are Chinese companies listed in Hong Kong. Many companies have more then one kind of share. It is important to note, that it is common to see shares trading at different prices. For example, airlines H-shares are about 25{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} lower.
Historically A-shares were known for their discounts, but no longer. Since the announcement of the Stock Connect April10, the Shanghai market has gone up 15{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, and the Hong Kong about 5{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. Shenzhen’s market has gone up by about 20{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, though they are set to join later.
Having been known for censorship and inaccessible internationally, this will open new opportunities and investment for short and long traders alike.