HKEx to introduce futures on price gaps in dual-listed stocks

Singapore

ONE of the world's most obvious - and elusive - arbitrage trades is about to get a whole lot easier.

Investors have long argued that valuation differences between dual-listed stocks in Hong Kong and China are unjustified, but betting that they'll narrow has proven tricky because of China's capital controls and, more recently, restrictions on executing bearish trades in the mainland.

A plan by Hong Kong's exchange to introduce futures on the price gaps, revealed in an interview on Thursday, would give investors a simple way to place their wagers. "There will clearly be demand for this type of product not only from a risk management perspective, but as an arbitrage tool given th…