Possible reasons for price discrepancies between the Shanghai and the Hong Kong stock exchange

Abstract

The domain of financial markets has always fascinated millions of people who try to understand it and to obtain positive earnings from it. The purpose of the following work is to discover if price discrepancies between the Chinese and the Hong Kong stock markets existed in 3 specific time periods and which are the reasons of such discrepancies. After having introduced the economic development of China and Hong Kong over time and the basic concepts of financial markets, I analyse the factors that could influence mispricing, such as asymmetric information or investors’ behaviour, and finally I demonstrate the fluctuation in prices through chart indicators.