eg: if a china stock traded in the usa market goes up, will the open price in the shanghai market (the next day) also follow the high price as per last traded in the usa market?

Yes, most likely it will open up in the USA market as well, but you never know and no one can guaranty!ThanksMohit

Generally if two assets trade at different prices at different locations, individuals will have an incentive to buy where the asset is cheap and sell it where it is dear, raising the price at one and lowering it at the other until the prices converge, or are so close that making such a trade is no longer profitable. This is called arbitrage, and it should keep the price of stocks on different exchanges from getting too far out of line. Or at least that's the theory...

Hello!I see what you are getting at! However, sadly, the two listing are subject to totally different market pressures. It is almost impossible to say whether a dip in the Hangseng (China) listing will be followed by a dip in the London FTSE listing.However, stocks are impacted by good or bad news about their own companies/subsidiaries. Positive quarterly-results could have a "domino" effect across markets. This is the exact situation that Arbitrage Funds exploit to make a profit.Kind Regards,Vinay

The price is governed by the market where the stock is most actively traded. If the first market to open is the least active market, the profesional traders will be fixing their prices based on what they think the most active market will open at.An example would be buying a small Australian stock in London. If the MMs thought the share would open higher in Aus they would add a bit on to the last Australian quoted price. If you think about it it is obvious!

According to the law of one price, the securities should be the same price (less transaction cost -- note here, transaction cost would involved the effect of foreign currencies). If not, then someone can arbitrage and bring the prices of the securities into alignment. By arbitrage, it can be done with just the underlying security or through a basket (or portfolio) of securities.Here's a thought exercise -- image it's gold rather than a particular stock. Gold is gold. If gold is being traded at one price in one market, then the price of gold in another market should follow the price of the first market. In your example, it's the same share of stock that just happens to trade in two separate exchanges. If the prices of the same stock trade at different prices, what is to prevent someone from buying the stock at the cheaper price and selling the same stock at the higher price and simply settle the trades via book entry.