Two prices for the same share

Some China companies are listed in Shanghai and Hong Kong exchanges. They are the same shares, but the prices traded could differ by more than 30%. I know of a large company where the share trades in Shanghai at three times the price in Hong Kong.

China has announced that they will soon allow the residents to buy shares in Hong Kong. This will mean that the prices of the same company will converge. The price will fall in Shanghai or rise in Hong or both.

This will be an interesting development.

More than 10 years ago, the blue chips shares in Singapore trade in local and foreign tranches. They are the same shares, entitled to the same dividend and voting rights. But the foreign shares trade at a higher price than the local shares.

When the distrinction between the two tranches were removed, the price of the local tranche increased to the foreign tranche. The increase varied from 20% to 50%. It was a big bonanza for the holders of the local tranche.