Market Structure, Volatility, and Performance of H Shares

Xiaoqing Eleanor Xu

Chinese Economy, 2001, vol. 34, issue 1, 49-73

Abstract: >i>This study concerns the market structure, volatility, and performance of H shares, stocks of mainland Chinaâincorporated companies that are listed in Hong Kong. This paper documents major events and key factors that have driven the performance and volatility of the H-share market since its debut in 1993. In addition, this paper compares the market structure and pricing of A and H shares issued by the same Chinese companies. It is found that H shares are highly liquid, extremely volatile, and traded at a large discount to corresponding A shares. The H-share discount has increased dramatically over the years due to listed firms' lack of financial transparency, poor management, improper usage of funds in non-core businesses, and deteriorating profitability. To foster a healthy Hong Kong-based primary and secondary market for China's shares, listed companies need to recover credibility and regain investor confidence.>/i>

Date: 2001
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