Buy A-Shares, Short H-Shares as Prices Drop, Credit Suisse Says

November 17, 2010, 8:33 PM EST

By Anna Kitanaka

Nov. 18 (Bloomberg) — Investors should buy A-shares and short-sell the H-shares of some dual-listed companies in China, such as Ping An Insurance (Group) Co. and Jiangxi Copper Co., Credit Suisse Group AG said.

The mainland China-listed A share prices of some companies are undervalued compared with their Hong Kong-listed H share prices, wrote analysts Peggy Chan and Vincent Chan in a Credit Suisse report today.

Buying the A-shares and short-selling their H-shares may be an option for investors as the premium on their China-listed share prices are trading below the one-year average against their Hong Kong shares, they wrote.

The analysts named 10 dual-listed companies, including Bank of China Ltd., China Petroleum Chemical Corp., Guangshen Railway Co. and China Eastern Airlines Corp. Short-selling is when investors borrow and sell stock hoping that prices will drop and they can buy back the securities, repay the loan and pocket the difference.

The other companies suggested by the analysts are Jiangsu Expressway Co., Shanghai Electric Group Co., Sinopec Shanghai Petrochemical Co. and China CITIC Bank Corp.

–Editors: John McCluskey, Nicolas Johnson.

To contact the reporter for this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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