The opportunity with HAO could come on valuation as H-shares, Chinese stocks trading in Hong Kong, including some held by HAO, are significantly less expensive than their mainland equivalents. The Hang Seng China AH Premium Index, which tracks the relative prices of 59 stocks that have both A- and H-share classes available shows A-shares trading at 40% premium to H-shares, the largest premium in six years.
Another catalyst could lift HAO as well. When Shenzhen is added to the Shanghai-Hong Kong Stock Connect program, Hong Kong-listed small-caps will become eligible for mainland listings. That could stoke a flurry of buying of HAO components.
HAO Options Breakdown
Chart Courtesy: Livevol