Rare! A surge of 46%, CATL's Hong Kong stock premium hits a record high

CATL's Hong Kong stock hits record premium, analysts warn that the upward trend may be difficult to sustain.

Since its listing on May 20, CATL's Hong Kong stock price has risen by 46%, far exceeding the 13% increase in its A-share price, and is at a 30% premium to the latter, marking the highest level in the market.

This high premium phenomenon in the Hong Kong stock market is rare among approximately 150 "A+H" dual-listed companies.

JP Morgan analyst Rebecca Wen believes that the main reasons for CATL's high premium in Hong Kong stocks are low liquidity due to the lock-up period after listing, the short-selling shares being heavily borrowed creating a short squeeze effect, and the stock's popularity among global investors.

Drivers of the Surge in Hong Kong Stock Price

The premium level of CATL's H/A shares partly stems from the low liquidity in the Hong Kong stock market.

According to JP Morgan's analysis, when CATL went public in Hong Kong, a large number of shares were locked up by anchor investors until November, resulting in limited circulating shares.

At the same time, most of the circulating shares in the market have been borrowed for short selling, leaving almost no additional shares available for borrowing, forcing short sellers to cover their positions recently, creating a short squeeze effect that further drives up the stock price.

In addition, CATL's Hong Kong stock is favored by overseas and global investors, which is also an important reason for the expansion of the H/A premium. Report data shows that since the first quarter of 2025, CATL has become the most held A-share by foreign capital, surpassing Kweichow Moutai.

Moreover, some global or emerging market funds are unable to purchase A-shares due to policy restrictions or prefer H-shares, further exacerbating the valuation premium of Hong Kong stocks.

CATL's production materials in July are expected to exceed expectations, and the upcoming second-quarter financial report also provides fundamental support for its stock price increase.

JP Morgan expects that the production forecast for China's top six battery manufacturers in July will increase by 6% month-on-month, exceeding previous concerns about production cuts. Among them, CATL's month-on-month growth performance is the most outstanding.

The report indicates that the market has high expectations for CATL's second-quarter financial report to be released on July 30, with expected sales reaching 140-150 GWh, and net profit expected to be between 15.5 billion and 16 billion yuan, a year-on-year increase of 25%-30%.

If this expectation is realized, it will mark CATL's first strong quarterly performance since its listing in Hong Kong