China Stock Digest Research and
Investment Opportunities in China Articles
Investing in China
International investing is a common component in almost any investment asset allocation, no matter what the risk tolerance is of an investor. International investing can provide both a form of portfolio diversification as well as an opportunity for investment returns. The addition and cultivation of international investment products has also made it easier for investors to add an international component to their personal portfolios.
Investors can consider international mutual funds, American
Depository Receipts, index funds and in some exceptional
cases direct investments into the Chinese
markets to add an international component to their personal
portfolios. Just as with any asset investment class, it is
important for the investor to understand the importance and
mechanism behind international investing.
The Chinese Investment Regulatory Bodies
Virtually every international and domestic exchange has a
regulatory body to oversee trading. In China, the shares that
are traded on the Hong
Kong Exchange are regulated by the Hong
Kong Exchange and the Futures Commission. Regulatory bodies
are designed to protect investors and to ensure an orderly
trading market. Also, these regulatory bodies often govern
how securities are listed, modified and removed from the nation’s
exchanges.
A Shares and B Shares
Most companies that are listed on the Chinese
markets will offer both A shares and B shares to investors.
A
shares re are offered in the home country’s currency
and limited to residents of the mainland. B shares, offered
on the Shanghai and Shenzhen stock exchanges, refer to those
that are traded in foreign currencies and are open to foreign
investing. The face values of B shares are set in Renminbi.
In Shanghai B shares are traded in US dollars, whereas in
Shenzhen they are traded in Hong Kong dollars.
Other Investment Options
For some investors, they may find it a more attractive and
a simpler option to purchase domestic mutual funds that have
Chinese exposure. The international asset class is an important
component to most investment portfolios. But, most professionals
will suggest that within the international asset class, the
investor diversify each country's exposure. For example, if
a portfolio is supposed to have 20% within the international
category, that 20% should be broken up among various countries
individually or within mutual funds that have expertly managed
exposure in multiple global markets.
U.S.- Listed Chinese Companies
In some cases, Chinese companies can be listed on the US
exchanges. In order for a Chinese company to be listed on
the New York Stock Exchange, it must follow the US guidelines.
This offering gives investors the opportunity to invest in
the Chinese
markets in a system that is regulated by the US government.
Overall, China is an attractive country to invest in, providing
investors the opportunity to take advantage of the booming
economy through direct investment in ADRs into mainland shares
or indirect investments into domestic mutual funds. As with
any investment of class, it is important to understand what
the best allocation is for the investor's risk tolerance.
Also, it is advised to compare multiple investment options
within the asset class so that the investor can make the best
investment choice possible.
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