Tech Giants Including CATL and GigaDevice Show Significant H-Share Premiums

A game of pricing power has begun as H-shares become more expensive than their A-share counterparts. The long-standing "iron rule" of A-shares maintaining a 30-40% premium over H-shares is being broken since 2025.

By April 22, 2026, the Hang Seng Stock Connect AH Premium Index had dropped to 118 points from a high of 161.36 points in February 2024, marking an eight-year low. The average A-share premium over Hong Kong stocks has recently narrowed from 40% to around 20%.

More notably, several Chinese hard-tech leaders are experiencing a rare phenomenon where H-shares trade at higher prices than A-shares. Companies including CATL, GigaDevice Semiconductor Inc., Montage Technology, WUXI APPTEC, and Jiangsu Hengrui Pharmaceuticals show substantial H-share premiums.

What are foreign investors paying for? On April 21, CATL's H-shares hit a record high of HK$745 intraday, closing at HK$736 per share. Its A-shares closed at 440.69 yuan, with market capitalization exceeding 2 trillion yuan, making it the first private tech giant to cross this threshold. The H-share premium over A-shares reached 30.57% at the close.

A key factor is the small float. CATL's H-share float is only 156 million shares, compared to 4.257 billion A-shares—representing just 3.7% of the A-share float. The smaller float combined with higher turnover makes it easier for capital to drive up prices.

However, the main driver is foreign capital. Industrial Securities noted in a recent report that foreign investors are the core force determining AH premium levels. Since CATL's Hong Kong listing, its AH premium has decreased as international intermediary ownership increased. There is a clear negative correlation between foreign ownership and AH premium—the more foreign investors favor a stock, the more expensive H-shares become relative to A-shares.

Overseas medium-to-long-term capital focuses not on short-term fluctuations but on CATL's irreplaceable position as a global battery leader, long-term growth potential, and scarcity. Even during the A-share downturn from 2022-2024, northbound capital continued increasing holdings.

Bosera Fund manager Zhao Xiancheng stated that foreign investors are repricing China's hard-tech assets. International capital is granting premiums and strategic allocations to Chinese leaders with global competitiveness, high ROE, and governance transparency. Some hard-tech leaders receive scarcity premiums due to their core positions in global AI computing, semiconductor localization, and new energy.

Historically, A-share pricing power rested with domestic mutual funds and retail investors, valuing domestic substitution, policy dividends, and local growth. After H-share listings, pricing power shifts to global sovereign funds, pensions, and MSCI passive funds, with valuations based on global market share, technological barriers, and long-term certainty.

Yongying Fund manager Chu Kefan added that domestic capital's influence on Hong Kong pricing is growing. Southbound capital's share of Hong Kong holdings rose from about 4.5% in 2020 to 12.7% in 2025, with trading volume share increasing from under 10% to over 20%, once exceeding 50% in a single day.

Zhao Xiancheng noted policy support has been crucial. In April 2024, the CSRC introduced five cooperation measures with Hong Kong, supporting mainland leaders listing there. In October, HKEX and Hong Kong's SFC established fast tracks for compliant A-share companies. In May 2025, the "Tech Enterprise Channel" provided listing guidance for tech firms, lowering compliance barriers and creating mechanisms aligning with international valuation systems. These policies provide institutional foundations for A-share leaders listing in Hong Kong and AH valuation convergence.

Which companies still trade at discounts? This round of H-share premiums is not broad-based. As of April 21, only eight A+H stocks showed H-share premiums, with hard-tech firms comprising half: CATL (30.57%), GigaDevice Semiconductor Inc. (20.71%), Montage Technology (12.71%), WUXI APPTEC and Hengrui Pharmaceuticals (both over 4%).

Most companies maintain A-share premium patterns—the recent AH premium index fluctuates around 120 points, indicating A-shares remain about 20% more expensive overall.

Who enjoys premiums? Zhao Xiancheng pointed out that H-share premiums are highly concentrated in hard-tech sectors with global pricing power like semiconductors, AI computing, and new energy, while traditional manufacturing maintains A-share premiums. These leaders typically possess global competitiveness, high technological barriers, stable cash flow, and high ROE, with relatively low southbound ownership—confirming foreign rather than domestic capital dominance.

Why are foreign investors willing to pay premiums? Four driving forces are identified: strong fundamentals (CATL's 2025 net profit rose 42% YoY; Q1 2026 revenue plus non-GAAP net profit increased 52% YoY; Montage Technology and GigaDevice Semiconductor Inc. saw 2025 net profits rise 58% and 49% YoY respectively); sector scarcity (Hong Kong lacks hard-tech manufacturing, high-end chips, and new energy storage targets); extremely limited share supply (CATL and GigaDevice Semiconductor Inc.'s H-shares represent under 5% of total shares); and global pricing power (Hong Kong's international institutional dominance means long-term capital pays certainty premiums for "irreplaceable global leaders").

This signals that global capital's pricing logic for Chinese assets is shifting from "uniform discounts" to "tiered pricing." Great Wall Fund's Qu Shaojie believes this extreme structural divergence may continue medium-to-long term: local assets maintain A-share premiums, while globally scarce hard-tech leaders enjoy H-share premiums—not a short-term fluctuation but an inflection point where Chinese hard-tech enters global valuation anchoring.

Changli Asset's Bao Xiaohui stated that the stereotype of global capital applying uniform discounts to Chinese assets is being broken. For global hard-tech leaders like CATL, foreign investors accept higher valuations, indicating some are repricing Chinese hard-tech with new valuation models.

Is this short-term speculation or long-term repricing? Skeptics see short-term bubbles. A private equity CEO believes small floats combined with allocation demands create temporary mispricing, predicting institutional pricing will decline significantly over longer periods.

Others caution that part of CATL's 30% premium comes from extreme scarcity amplification. If supply increases—more stocks list in Hong Kong—this premium could compress. True "global valuation anchoring" requires international institutions staying invested with premiums stabilizing in reasonable ranges.

Proponents view this as a long-term trend's beginning. Qianhai Kaiyuan Fund's Yang Delong believes the declining AH premium index reflects Hong Kong tech leaders' surges, with international capital optimistic about Chinese tech leaders, granting higher pricing. He extends this to geopolitical perspectives: post-Middle East conflicts, more investors recognize China's safety and stability, bringing higher value and premiums to Chinese assets.

Qu Shaojie notes global capital's pricing logic has completely shifted from regional market risk discounts to tiered pricing: local assets keep A-share premiums; globally scarce hard-tech leaders enjoy H-share global scarcity premiums. This extreme structural divergence may persist medium-to-long term.

Chu Kefan thinks global capital's pricing logic is transitioning from "overall discounts" to "scarcity premiums," likely continuing due to scarce quality core assets and sustained foreign allocation demand for China.

Zhao Xiancheng agrees H-share premiums may gradually normalize and generalize. Industrial Securities judges that as more quality tech growth and manufacturing companies conduct secondary listings in Hong Kong, combined with accelerating foreign capital returning to China, Hong Kong stocks trading at premiums to A-shares may become normal and widespread.

Industry consensus maintains divergence will persist long-term. Bao Xiaohui believes foreign recognition of Chinese assets currently only applies to hard-tech firms, with most Hong Kong-listed hard-tech companies needing time to prove themselves through performance.

How should investors approach H-share premium targets? First, select H-share premium targets. Qu Shaojie considers H-share premiums themselves a "certification"—representing global capital market recognition of world-class companies.

Second, watch sector complementarity opportunities. Chu Kefan suggests besides tracking Hong Kong discount convergence, utilize structural differences: Hong Kong gathers 60-70% of China's software and application tech assets (e.g., internet, AI applications), complementing A-shares' hardware focus, offering greater capacity during AI application waves.

Third, focus on hard-tech leaders. Zhao Xiancheng proposes a two-dimensional strategy: sector-wise, concentrate on main fields with established global advantages like semiconductors, new energy, AI computing, and innovative drugs; company-wise, prioritize leaders with high technological barriers, stable global market share, strong cash flow, and high ROE.

Fourth, implement two-way arbitrage strategies. Bao Xiaohui offers specific tactics: if a hard-tech firm maintains long-term H-share premiums, it indicates strong foreign recognition. Investors can directly allocate to such H-shares while reversely positioning corresponding A-shares. A-shares offer better liquidity, with markets easily repairing valuation expectations, capturing AH premium spreads.

Fifth, maintain long-term patience. A private equity CEO reminds from a longer perspective: currently, Hong Kong stocks are deeply discounted, with leaders trading at 5-10 times valuations versus 30-40 times in A-shares and U.S. markets, suggesting huge potential gains under specific conditions but requiring long-term patience.