Connect program to deliver arbitrage aplenty

Although the flow of investment under the Shanghai-Hong Kong Stock Connect program is expected to help close the price gaps between Hong Kong-listed H shares and Shanghai-listed A shares in mainland enterprises, analysts remain confident there will still be arbitrage opportunities aplenty.

The Hang Seng China AH Premium Index, which tracks the average price gap between A and H shares of dual-listed stocks, closed 0.57 percent higher at 102.14 on Monday, meaning that of the total 67 companies listed in both Shanghai and Hong Kong, the average price premium of A shares was 2.14 percent over H shares. An index of 100 indicates total price convergence.

"When the average price gap is less than 10 percent, it will be relatively unattractive to arbitrage. But at the individual stock level, there are still opportunities," said BNP Paribas in report published last week.