How are Chinese Stocks Traded?

Flag of China on the Yangtze River in Nanjing_Jiangsu Province_chinaThis article follows a recent discussion with a Chinese coin investor, here we take a look at Chinese stocks and the ways there are traded.

The Chinese Market for stocks is not like the United States stock exchange. Whereas U.S. businesses offer company shares in a uniform fashion, the Chinese Market has several components that allow for trading in a heterogeneous fashion.

Chinese “A” Share Market
“A” Shares are Chinese stock that come from companies incorporated in the mainland. They are typically unavailable to foreign investors and follow the country’s currency standards in value. Many U.S. and British investors do not study the “A” Share market since it is exclusive in nature.

“B” Shares
Contrary to its “A” Share counterpart, “B” stocks are open to the world market and are sometimes penetrated by foreign investors. Designed to give Chinese companies overseas exposure, “B” Shares allow businesses to list themselves in the “A” Share Shanghai and Shenzhen market, but follow United States currency standards in assigning value to stocks. Such versatility affords Chinese corporations the opportunity to exchange stock in several countries, ultimately increasing revenue potential.

Hong Kong Shares
Hong Kong or “H” Shares are stock that is exclusively traded on the Hong Kong market rather than the mainland “A” Share Market. This market is rarely penetrated by local and foreign investors because of the complexity involved with trading stocks.

Chinese Stocks on the New York Market
The easiest and most convenient way to exchange Chinese stock is on the New York Market. Although not ideal for individuals wanting the cultural experience intermingled with trading, the New York Stock Exchange is the best way to acquire and rid oneself of foreign shares. With the country’s popularity at an all-time high, many investors are choosing to purchase shares from Chinese companies in hopes of gaining a large return. Over fifty Chinese companies are listed in the United States Market and this number is expected to grow in coming years.