THE valuation difference between mainland shares traded in Hong Kong and Shanghai narrowed by the most in three months amid growing speculation that an exchange link between the two bourses will lure arbitrageurs.

    The Hang Seng China AH Premium Index climbed 1.6 percent to 91.59 yesterday morning, signaling a narrowing gap between dual-listed stocks. The exchange link will start Oct. 13, the National Business Daily said, citing an unidentified brokerage.

    The exchanges agreed in April to allow cross-market trading, opening up the mainland market further to foreigners while giving wealthy mainland investors a route to buy Hong Kong stocks.

    Valuation gaps between the two exchanges had reached the widest since 2006 on July 23 as mainland investors exited the stock market and international money managers awaited details of the exchange tie-up.

    “Mainland big-cap shares are cheap and quite low in valuation and there have been some arbitrage opportunities,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The stabilization of the economy has also fueled the buying sentiment.” (SD-Agencies)