Mainland equities continued their downward correction this morning (they've since rebounded a little)... while Hong Kong equities move in the opposite direction. Given that many companies are listed in both markets, how is this possible? The only explanation is that Hong Kong investors are ignoring price movements across the border.
Normally investors might interpret changes in share prices as reflecting new information on the underlying value of the shares. In that case, share prices falling in one market can lead to similar falls in other markets- commonly referred to as "market contagion."
We're not seeing market contagion this time around, which can only mean that Hong Kong investors are interpreting failing share prices as completely divorced from market fundamentals. Clearly Li Ka-Shing is not the only Hong Kong investor who had concluded that mainland share prices represent a bubble!
Given that Shanghai's 'A' shares started trading at a 200% premium to Hong Kong's 'H' shares, they may rationally ignore falling prices for a lot longer.... the cumulative decline in mainland share prices so far is only 16% so far.