China A-shares traded on mainland China exchanges become attractive valuation wise after steep decline in the past couple of months.  Up until 31^st May 2010, the FTSE/Xinhua China A50 index, which tracks large free-float China shares listed in Shanghai and Shenzhen, is down about 25% for the year.  The iShares FTSE/Xinhua A50 China Tracker (SEHK: 2823) is an ETF listed in Hong Kong which track the performance of the index.  The ETF is currently trading at premium to NAV (Net Asset Value) of close to 10%.  This is the highest level of premium according to the NAV premium/discount table provided by the fund.

The constituents of FTSE/Xinhua China A50 index comprise mainly finance stocks, accounting for about 61% of the fund.  Its biggest component stocks include the likes of Ping An Insurance, China Merchants Bank, Industrial Bank, Bank of Communications etc.  The discount between H-shares traded in Hong Kong and its correspondent A-shares traded in mainland China has narrowed substantially.  Most banks and insurance companies H-shares are actually trading at a premium to their A-shares.  This possibly leads to the basket of stocks (A-shares) in A50 ETF trading at a discount to their H-shares in Hong Kong although not all shares in FTSE/Xinhua China A50 have H-shares listed in Hong Kong.  It is therefore not surprising to see A50 ETF trading at a premium as foreign investors see value in the fund.  Nevertheless, arbitrage activities should limit the premium of the ETF as a 10% premium is too attractive for the qualified institutions which can create more units of the fund.

香港股市上周从去年高峰下跌接近两成后反弹。如果反弹力量持续，当地的个别股票短期的上涨潜能是很好的。大马投资者可以在大马股市选择通过港股认购凭单来参与这个预期的上涨趋势。可是前几个月发行的港股凭单的行使价都设在和当时母股价位接近的水平。在经过连月的下跌以后，这些凭单的行使价已经比母股高出不少，使得这些凭单成为极度价外凭单。虽然这些价外凭单在股市持续上涨后还是有赚钱的机会，

居于我国凭单市场的买卖盘不多而且造市商的积极性还有待改善，选择欧式的价外凭单是有相当大的风险的。若要避免母股上涨凭单不涨的局面，投资者唯有选择溢价不高而且最好是美式凭单。在2008年发行的港交所-CB虽然期限即将来临，它却以折价交易。这项凭单将在6月18日到期并且在6月15日为最后交易日。