|
China has been a popular subject matter discussed among investors around the world as their economy has been strengthening and as they have been gaining international exposure. Investors have several options available to them if they are interested in having exposure to the Chinese market within their investment portfolio.
Most major markets have mutual funds containing China shares within their international portions. In some larger stock markets, China companies are listed on the domestic exchanges and traded in local currency under the securities laws of the particular company in which they are listed. Major markets such as the London Stock Exchange lists Chinese securities in the form of Global Depository Receipts, or in the case of the US markets, investors can invest into the China market through ADR’s.
China’s shares are listed in terms of A shares, B shares and H shares, with A and B shares trading next to each other for each listed security and the most commonly traded shares. If an investor purchases shares in a mutual fund in their local stock market, they are likely buying B shares of the Chinese listed stocks.
China B Shares were originally developed as stock shares for foreign investors, as the A share market is inclusive of only residents of the Chinese mainland. China B shares are listed in the denomination of Renminbi, which is the Chinese local currency. But, B shares are payable in foreign currency, making them attractive and accessible to foreign investors.
B shares are listed on the Shanghai Stock Exchange in US dollars, while they are listed on the Shanzhen Stock Exchange in Hong Kong dollars.
Chinese B Shares are stocks initially designated for foreign investors. They are denominated in Renminbi, the Chinese local currency, and payable in foreign currency. B Shares listed in Shanghai Stock Exchange are listed in US dollars, while B Shares listed in Shenzhen Stock Exchange are listed in Hong Kong dollars.
International investing is an important component to an investment portfolio, often appearing in the asset allocations of moderate to aggressive investors. It is common for the weighting of international investments to be between 10-20% of the entire portfolio’s allocation.
When selecting individual securities to fulfill the international component of an investment portfolio, it is advised to diversify across counties. Attempt to work to accomplish portfolio presence in emerging markets and established markets, and expand your portfolio across international markets. By diversifying your investment portfolio, you will have a strong opportunity to take advantage of upswings in various markets as well as to protect your portfolio against downturns.
|
