Battery giant Contemporary Amperex Technology Co. Ltd. (CATL) has seen a 46% jump in its Hong Kong-listed shares since debuting in May.

This surge has created a 30% premium over its Shenzhen-listed stock, after adjusting for currency differences.

This is notable as most of the roughly 150 dual-listed companies in Hong Kong typically trade at a discount to their mainland listings.

JPMorgan analysts cite low liquidity from a post-listing lock-up, a short squeeze due to share borrowing, and strong global investor interest as key factors.

They warn, however, that the rapid rise may lead to a pullback.

CATL’s premium fits into a broader trend of some Hong Kong listings trading above their mainland counterparts this year. Still, such large double-digit gaps remain rare.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ CATL’s premium defies historical dual-listing patterns

CATL’s 30% premium in Hong Kong represents an unusually large price gap compared to typical dual-listed company patterns.

Historical data from other dual-listed companies shows much smaller differentials, with examples like BHP Billiton showing an 8% premium for UK shares over Australian shares, and Rio Tinto averaging just a 2% premium for its UK listing1.

The magnitude of CATL’s premium suggests extraordinary international investor interest beyond typical market dynamics.

While short-term factors like post-listing lock-up and potential short squeezes contribute to this anomaly, such extreme differentials have historically been rare and often temporary.

The only comparable example mentioned was Anhui Conch Cement’s 68% premium in 2014, which quickly normalized after the Shanghai stock connect opened, improving market access for international investors.

2️⃣ Global expansion strategy drives CATL’s Hong Kong listing success

CATL’s strategic Hong Kong IPO serves as a financial bridge to fund its ambitious international growth, explaining part of its strong performance.

The company allocated 90% of its $4.6 billion IPO proceeds specifically for international expansion, with major investments including a €7.6 billion ($8.2 billion) battery plant in Hungary2.

This international focus resonates with global investors, as CATL already derives over 30% of its revenue from international sales while supplying major automakers like Tesla and Volkswagen3.

The Hong Kong listing provides CATL with enhanced foreign currency reserves needed for its global projects, including its manufacturing bases in Germany and planned joint venture in Spain23.

This expansion strategy appears particularly timely as CATL faces increasing competition and margin pressure in its domestic market, making international growth critical to maintaining its 38% global market share in EV batteries2.

3️⃣ Premium reflects divergent investor assessments of geopolitical risks

The substantial price difference between CATL’s listings likely reflects differing risk assessments by international versus domestic investors regarding geopolitical factors.

Despite being added to a Pentagon blacklist alleging military ties (which CATL denied), international investors have shown strong confidence in the company’s global prospects through the Hong Kong listing3.

The pricing gap suggests international investors may be placing greater emphasis on CATL’s technological leadership and global expansion potential than on geopolitical concerns that might weigh more heavily on mainland investors.

Morningstar’s analysis specifically noted the unusually tight pricing gap of 7% compared to the typical 20%-30% discount seen in other dual-listings, indicating strong global confidence in the company’s fundamentals4.

This divergence highlights how international investors are willing to pay a premium for access to China’s EV battery leadership despite ongoing US-China trade tensions that create uncertainty in the sector.

Recent CATL developments

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