Empirical Study On Stock Price Variation Between A Stock And H Stock

Along with Chinese economy development, lots of Chinese listed companies intended to issue stocks in both domestic and overseas capital market to absorb more funds. Due to the unique geography edge and remarkable role in financial profession, Hong Kong has tended to be the tie between local capital market and offshore one. Hence majority of listed companies prefer to issue in A-share market and H-share market simultaneously. However in contrast with H-share market, A-share market, as an emerging capital market, has obvious gap in terms of principle and administration. One reflection of that gap is the disparity of price for the same share that listed in the various markets. It seems that most H-shares of dual-listed company are more likely to be in a discounted status compared to A-shares. In order to promote development of capital market towards health and stability, it is essential to improve the process of A-share market internationalization and analyze the factors which contribute to price discount of H-share.With the combination of real evidence and theory, the analysis is on the basis of appropriate variable indices selection and data panel establishment in respect of corporation feature and time choice. The result indicates that information asymmetry; risk variance; concept of investment and reform the split share structure could explain price disparity which is barely relevant to liquidity and demand elasticity, and have the positive correlation. Meanwhile the A stocks'investors having the dominant position in information and investment idea lacking of mature compared with H stocks'investors. Reforming the split share structure has significant effect in narrowing the stock price variation between A stock and H stock. In accordance with empirical outcome, by considering about current capital market development situation, the thesis argues how to introduce global investors; explore finance instrument; strengthen administration of information exposure and enhance professional publicity. Eventually, the target is to accelerate pace of national security market and promote the procedure of internationalization.