Understanding the Chinese Stock Market: What Are Chinese A Shares?
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by: Zhang Zhengfeng
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Word Count: 368
Date: Tue, 25 Jan 2011 Time: 6:28 AM
Chinaâs A Share market refers to stocks that trade on the Shanghai and Shenzhen exchanges. These companies are incorporated in mainland China and their shares are denominated in the local currency (renminbi). These stocks are strictly off limits to non-Chinese investors, unfortunately, if you are an individual investor. Professional investors, however, can find a few ways around this restriction.
Now for a bit more confusing information. Some Chinese companies are listed in Shanghai and Shenzhen, but, instead of renminbi, the shares (B shares) trade in U.S. dollars. B shares were designed to give Chinese companies a way to raise capital from overseas as well as to allow non-Chinese investors a way to invest in the market without the restrictions associated with A shares. The B share market now, however, has lost its liquidity.
Skipping over a few letters in the alphabet, what about âH sharesâ? H shares are also Chinese companies, but these particular securities trade on the Hong Kong Stock Exchange rather than on the mainland and are subsequently priced in Hong Kong dollars instead of renminbi. It is technically possible for individual investors to buy and sell shares on the Hong Kong market, though it is a cumbersome process and rather difficult to obtain..
There is also Chinese stock in New York. Investor interest in recent years has grown in China and a brand new crop of Chinese stocks has emerged. These companies are headquartered in mainland China, but they have chosen to list their shares on the New York Stock Exchange (Nasdaq) instead. Seventy Chinese companies are currently listed in the U.S. If you are an individual investor, shares of New York-listed companies will be the easiest way to get started investing in Chinese stocks.
About the Author
Zhang Zhengfeng is the author of this article on Chinese A Shares. Find more information about China Company Research here.
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