CROSS‐MARKET TRADING IN CHINA'S LARGE STATE‐OWNED COMMERCIAL BANKS, 2006–2011 | Zendy

BURDEKIN RICHARD C. K. | Zendy; YANG YANG AMANDA | Zendy

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CROSS‐MARKET TRADING IN CHINA'S LARGE STATE‐OWNED COMMERCIAL BANKS, 2006–2011

Author(s) -

BURDEKIN RICHARD C. K.,

YANG YANG AMANDA

Publication year - 2013

Publication title -

contemporary economic policy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.454

H-Index - 49

eISSN - 1465-7287

pISSN - 1074-3529

DOI - 10.1111/j.1465-7287.2011.00306.x

Subject(s) - earnings , china , economics , monetary economics , differential (mechanical device) , state owned , relative price , business , financial economics , finance , market economy , engineering , political science , law , aerospace engineering

This paper examines the differential between the share prices of China's large state‐owned commercial banks traded in Shanghai versus prices observed in Hong Kong. We find a significant role for investor sentiment, as reflected in relative price‐earnings ratios, in explaining these price differentials for all four banks. The share price in Shanghai tends to move ahead of the share price in Hong Kong when more positive sentiment in Shanghai makes local investors willing to pay more for the same predicted earnings. We also identify common trends in relative bank price‐earnings ratios and price differentials across the two markets . ( JEL G14, G15)

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