Hong Kong listed shares represent a bit of a riddle for investors. They have much in common with their cousins listed in mainland China, yet have performed very differently.
Looking at the charts for the first half of the year shows a fairly loose correlation between so-called H-shares and A-shares. Given that the companies which issue H-shares are incorporated in mainland China and are in many cases equally tied into the wider health of the Chinese economy, it is notable that they have not seen such steep rises and falls.
One way to look at this is that the performance of A-shares this year has been a market quirk and does not indicate there is anything major to worry about in the underlying economy.
Over time, it seems reasonable to expect the correlation between A-shares and H-shares to become tighter. Whether that is more related to volatility in A-shares decreasing or volatility in H-shares increasing could be very telling.
