Suppose that I am a SEK investor and own a stock of a Chinese company listed in HKD in Hong Kong.

What is my actual currency exposure in this case?

Is my exposure the same as if I would own this in CNY? Or does the currecy HKD make a difference?


There are two types of shares that you are talking about:

H Share - HKD traded at Stock Exchange of Hong Kong, held by a Hong Kong nominee service (Think ADR)

A Share - CNY (Onshore, not to be confused with Offshore CNH) traded at Shanghai and Shenzhen Stock Exchange; can be purchased by Qualified Foreign Institutional Investor (QFII) using CNY; can be purchased by individuals via Stock Exchange of Hong Kong using CNH:

  • Shanghai-Hong Kong Stock Connect (Northbound)
  • Shenzhen-Hong Kong Stock Connect (Northbound)

The price relationship betweeen H Share and A Share is absolutely not:

H Share x Exchange Rate = A Share

The price is roughly:

H Share x Premium Ratio = A Share

Where Premium Ratio is around 0.9 to 4.0, i.e. A Share is more expensive even after factoring in exchange rate.

The weighted average of the Premium Ratio is represented by Hang Seng Stock Connect China AH Premium Index.

The reason that the Exchange Rate is not equal to the Premium Ratio is that:

  • Northbound and Southbound Stock Connect is subject to daily quota for total amount transacted.
  • There is capital movement restriction for individuals and institutions, i.e. only certain amount of movement of CNY in and out of Mainland per year is allowed. Whereas CNH in Hong Kong have no restrictions other than Anti-Money Laundering controls.
  • Not every foreign institution is a Qualified Foreign Institutional Investor (QFII).
  • Not every individual can invest in global markets, thus their investment options are limited to Mainland A shares, reinforcing the demand.

As a side note, even the largest China ETF: iShares MSCI China (MCHI) is holding more H Share than A Share.


No matter if you invest in H Share or A Share through Stock Connect, you end up with HKD or CNH in Hong Kong. Given that Hong Kong is a free market for now, CNH can be exchange to HKD at market rate, and HKD can be exchanged to SEK at market rate.

  • Thanks this was very important info! It didnt answer my questuon tho about the SEK, or any other non dollar pegged currency!
    – Nora Nora
    Feb 17 '21 at 12:11
  • Thanks for update! But what are the implications of this free maket rate for the difference in sek return? Between just CNY/SEK cross and CNY/HKD + HKD/SEK? In the long run
    – Nora Nora
    Feb 18 '21 at 7:52
  • @NoraNora The implication is similar to another question money.stackexchange.com/questions/124277/… . If CNH/SEK appreciates then you get more SEK when you sell the A-Shares or H-Shares. It doesn't matter many many legs of cross you use as long as mid-price is used.
    – base64
    Feb 18 '21 at 8:22
  • This seems counterintuitive, what if CNY/HKD down i.e les HKD per CNY and then HKD/SEK constant then you get les SEK aswell. It could still be the case that CNY/SEK goes up right? I.e HKD/SEK is independant of CNY/SEK
    – Nora Nora
    Feb 18 '21 at 10:59
  • I want a "clean" exposue to CNY/SEK, it is not the case that I only care about return in SEK
    – Nora Nora
    Feb 18 '21 at 11:49

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