The underlying reasons for the A-H price gap. It is widely perceived that capital controls in China and the diverging cost of capital between domestic and overseas investors are the key reasons for the A-H share price gap. We
believe that this is true, to a certain extent. The simple average premium of A shares versus H shares reveals that as both markets grew and became more mature, an inherent force has brought the prices of the two classes closer.
Therefore, even if the A-H share premium widens in the near term, due to the boom in A-share prices, it would not reach the previous 2000-01 peak.