Analysis on the Formation Causes of AH Premium and the Reverse Premium Anomaly of Leading Companies

Abstract

As the interconnection mechanism of Shanghai-Shenzhen-Hong Kong Stock Connect keeps improving, an increasing number of enterprises choose to go public simultaneously in the A-share and H-share markets. However, the long-standing problem of “same stock with different prices” and the persistent premium of A-shares still exist. Taking the valuation difference between A-shares and H-shares as the research object, this paper uses literature review, comparative analysis and case studies to explore the formation mechanism and fluctuation characteristics of AH share premium from the perspectives of market structure, trading system, liquidity, investor sentiment and exchange rate changes. It also focuses on the reverse premium anomaly of leading enterprises such as CATL. The results show that structural differences between the two markets are the main cause of AH share premium, and macro liquidity and capital flows significantly affect the trend of the premium. Meanwhile, industry leaders with strong fundamentals and high information transparency are more likely to show H-share reverse premium. This study can provide references for cross-market investment decisions, corporate capital operation and the institutional optimization of capital markets.