Weak Yuan Boosts the Appeal of Hong Kong Stocks Over China’s

-- Chinese stocks traded on the mainland are lagging their Hong Kong peers by the most since 2011, an underperformance that’s likely to endure as a weak yuan saps the former’s outlook.Tech Up in Late Hours as Nvidia Emboldens AI Bulls: Markets Wrap

“A-H premium compressed steadily in 2016 in the aftermath of China’s devaluation episode,” he added, referring to the valuation premium commanded by mainland stocks over their Hong Kong listings.The rally in Hong Kong equities, spurred by earnings optimism and cheap valuations, has received support from an influx of money from mainland investors.

For all the dollar tailwind, performance in the Hong Kong market, where many stocks are Chinese firms, also hinges on the recovery of world’s No. 2 economy. This means a dramatic weakness in the yuan triggered by China’s economic fragility will inevitably weigh on the city’s stocks.

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Weak Yuan Burnishes the Appeal of Hong Kong Stocks Over China’sChinese stocks traded on the mainland are lagging their Hong Kong peers by the most since 2011, an underperformance that’s likely to endure as a weak yuan saps the former’s outlook.
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