Chinese Stock Listings in Europe Facing Problems
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Analysts say that China’s plan to have its companies listed in the London and Zurich stock markets needs to be adjusted, as the limited liquidity of traded Chinese companies has provided investors with arbitrage opportunities.
The Shanghai-London Stock Connect, which has been running for four years, has only had five Chinese companies issue Global Depository Receipts (GDRs) in London, and a further 13 are listed in Switzerland.
GDRs allow investors to buy shares of foreign companies on their home exchanges.
Despite the small number of companies, investors have been attracted by the price anomalies and have been able to make a return of 4-5% by swapping GDRs for stocks listed on the mainland.
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