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Shanghai - Chinese shares in Hong Kong climbed for a sixth day, narrowing their price gap with mainland counterparts to the smallest since 2014, as cheaper valuations in the city lured investors.
A gauge tracking the price difference between dual-listed shares dropped as much as 0.5%. The Hang Seng China Enterprises Index headed for a nine-month high while the Shanghai Composite Index was little changed.
China Life Insurance rose to the highest since January in Hong Kong, pacing an advance by insurers. Stocks in the city extended gains after data showing that a weaker yuan cushioned Chinese exporters last month.
Chinese equities in Hong Kong have been outperforming their mainland peers after valuations in the city dropped to the lowest level in at least a decade in February.
The H share gauge’s relative strength index has been above the threshold of 70 in the past three days, a signal to some investors that it may be due for a pullback. Mainland investors have been increasing their net purchases of Hong Kong shares through the Shanghai link recently, using up at least a third of their daily quota over the past six days.
“Hong Kong shares look overbought in the short term and the market may take a break or be set for wild swings going forward,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “However, the stocks still have an advantage over mainland shares from a valuation perspective. We are still positive on the market.”
The Hang Seng China AH Premium Index was 0.4% lower at 120.16 as of 08:04. The Hang Seng China Enterprises gauge traded at 9 999.14, while the benchmark Hang Seng Index advanced 0.3%. China Life climbed 1.7% and New China Life Insurance headed for its highest close since December, as a measure of financial company shares paced equity gains.
Mainland trading
The Shanghai Composite was at 3 091.07. The gauge has moved less than than 1% on a closing basis for 17 days in a row, a phenomenon last seen in 2001 when the nation’s equity market was just a decade old. Trading volumes in Shanghai were 23% below the 30-day average for the time of day.
While other global equity markets are also experiencing muted trading, the subdued nature of Chinese shares follows extreme intervention by policy makers to stabilise the world’s second-largest stock market in the wake of last year’s $5trn rout.
China’s exports slipped 2.8% in US dollar terms in August from a year earlier, while imports rose for the first time since 2014, the customs office said on Thursday. The statistics bureau is due to release August inflation figures on Friday and data on industrial output, fixed-asset investments and retail sales next week.
