Liu buys Minsheng Bank H-shares to sell a shares for a two-month arbitrage of HK $80 million

Hong Kong Ming Pao reported that with the increasing number of listed companies in the mainland and China, arbitrage through the market spreads between the two places is also increasing. Minsheng Bank (market, Inquiry) (1988), one of the founders of the mainland tycoon Liu, in July and September respectively in the H-shares and a-share market one to buy a public bank stake, the use of a, H share spreads successfully arbitrage more than 80 million yuan (Hong Kong dollar, the same below). Financial profit PO, current savings rate increase 1000% according to the disclosure of HKEx, Liu from July 18 to July 26, within a period of more than a week, seven times per share between 7.75 to 8.17 Yuan, the purchase of 16.986 million shareholders in Hong Kong shares, that is, during each trading day on the market to sweep goods.　　The maximum number of shares per purchase is no more than 5.3 million shares, up to about 5% of the day turnover, and eventually Liu's increase in the total investment of H-shares in the People's Bank amounted to 134 million yuan.　　But by September, Liu in a A-share large hand reduction, from September 2 to September 10, every trading day shipments, 8 transactions, a total of 82.7 million shares of the People's bank shares, with an average price of 10.08 yuan per share, set now about 840 million yuan. Still holding 1.9 billion shares if the Liu this July overweight part, to each share between 7.75 to 8.17 yuan overweight, but in a shares to 10.08 yuan, that is about 12.7 Hong Kong dollar reduction, one time, that is to earn about 82 million yuan, if converted into a return on investment of 61%.　　As the Liu shares still hold 1.9 billion shares in the People's Bank, so the proportion of the shares only from the end of June to the 8.8% micro-8.41%,h shares held at 0.29%, he relied on the successful arbitrage of the two markets in the short term, basically to a lesser amount of capital control more shares. AMTD Securities Business Department General manager Deng Hing pointed out that if the majority of shareholders hold more goods, and the intention to maintain the number of shares or equity ratio, there are incentives in a shares than H-shares when a high premium, the purchase of H shares and sell a corresponding number of a shares.　　Of course, it is rare for the Liu to sell a shares to the H-shares. Hedge funds: Fear of damaging corporate reputation However, as the mainland's private enterprises rich, Liu is the New Hope (market, interrogation) group chairman, is also one of the founder of the People's Bank, through the two markets of the difference arbitrage, the practice has also been criticized by the market.　　The fund managers of Hong Kong's hedge funds point out that Liu's actions cannot be called capital operations, but simply make money for themselves, which is disgraceful and damaging to corporate reputation as a big shareholder. Yao Guo Si, director of the securities market, said that unless investors hold a large number of shares, otherwise, in consideration of the RMB exchange rate factors, and the Chinese and Hong Kong stock market arbitrage mechanism, it is difficult to rely on selling a shares to buy an H shares profit.　　Only those investors who hold more goods and do not want to concentrate all their investments will be able to conduct similar arbitrage practices. It is difficult for retail investors to participate in the mainland's 82 shares listed on a shares and H shares.A shares have a premium of 58 shares over H-shares. Theoretically, if there is a price difference, investors have the opportunity to arbitrage the same stock in different markets. In practice, it is profitable to find a high premium and a large volume of shares in circulation.　　It would be very difficult to carry out such arbitrage if it were not for the large households holding both accounts. After discounting the mainland financial unit controlled by Central Huijin, there are not many shares with sufficient liquidity and high premiums, mainly in the automobile, coal and mining stocks. Therefore, Liu can first declare the purchase of Minsheng Bank (1988) H-shares and then sell a shares is unique. At the same time, in Hong Kong dollars, a shares more than the H-share premium of more than 1 time times the number of more limited.　　More investment in the market, at the same time a share of the relative H shares have a premium, the main focus in the emergence of more than 25% of the premium. China-Hong Kong shares cannot be directly closed to investors to sell a shares at the same time, to buy H-share arbitrage, because the lack of direct market share of the two markets mechanism, the need to split between China and Hong Kong to buy, sell processing.　　This kind of operation, retail investors are also difficult to participate in, only the holders of shares in China and Hong Kong, the major shareholders, including a, H-shares and qualified foreign institutional investors (QFII) to qualify. In the case of Liu, he averaged about $7.89 per share in July when he bought a total of 16.986 million shares in the People's Bank. Comparing the closing price of the H-shares yesterday at 9.69 Yuan, he can earn 30.59 million yuan. Technically, this was his September this year to reduce the number of people's bank shares, providing more space. If the people's Bank of H shares can continue to rise, he can theoretically sell more shares, balance in the hands of H-share positions.