Key insights
- The post questions the valuation disparity between US and Chinese equities, citing increased US political unpredictability. It highlights the divergence in performance between mainland China/Hong Kong-listed shares and US-listed ADRs of Chinese companies, suggesting a disconnect in risk perception within the US market. This discrepancy may reflect concerns about US-China relations and regulatory risks specific to ADRs, potentially leading to continued underperformance of Chinese ADRs relative to their onshore counterparts.
why do usa equity trades at much higher equity premium
and chinese stock trades at huge discount?
previous theory (back in 2022~ beside paper company issue, etc) was that chinese government is too unpredictable/can kill the company next day based on political decision
but now usa seems to be almost as unpredictable as china
also what I dont get is chinese A50 share (mainland china) and hongkong non-adr shares seems (hongkong etf) to trade all time high (near or above 2021 peak) but adr shares trades at all time low (near 2022 low) which seems to be huge discrepency. they are all tradeable in usa market (through etf, but they all have same foreign direct ownership ban)