Entering China's Stock Market


"China Hot Stock" is a hot topic for stock investors in recent years. Compared with the US and European stock markets, there are many different areas that need to be understood by potential investors if they want to participate in the strong run of China after the bear market in 2005.

The color code of the price movement

The price change color code is the opposite of the Western stock market. When the price changes compared with the previous day's closing price is positive, the real-time price will be marked as red.

Shanghai Stock Exchange

There are two Board of Directors, namely A shares and B shares. Shanghai A shares were traded in Reminbi, while Shanghai B was trading in US dollars. As a result of the China monetary control policy, local Chinese people are constrained by holding and trading US dollar pricing for Shanghai B shares. So the locals are mainly trading in the A market, while foreigners can only trade in the B market. As of January 2008, a total of 840 A-share listed companies and 54 B-share counters. You can see, compared with the A market, B market size is relatively small. There are companies in the A and B markets

Shenzhen Stock Exchange

There are 2 boards-A and B shares. Shenzhen A shares trading in Remy, Shenzhen B to Hong Kong dollar transactions. The locals are mainly traded in the A market due to foreign exchange controls, while foreign entities are limited to Hong Kong dollar-denominated B shares. As of January 2008, Shenzhen A market listed stock of 670, B market only 55. B Market size is less than 10% of A market

Hong Kong Stock Exchange H shares (Chinese companies listed in Hong Kong or Chinese companies) and Hong Kong company stock are traded in Hong Kong dollars. Hong Kong's international influence on Western finance, international finance and legal systems has attracted many Chinese companies to list on the Hong Kong Stock Exchange, including China Shenhua, a Chinese government affiliate of PetroChina, Bank of China and China Mobile. At the end of 2007, a major private stock listed on the Hong Kong Stock Exchange was Alibaba.com, an online online trading platform for a Western online provider of Ma Yun.

Taiwan Stock Exchange's index has been bleak for nearly 10 years. The main negative factor is the political problem of the conflict between China and the Taiwan government, and the result of one-way diversion of Taiwan's investment flows to China. With the forthcoming Taiwan presidential election in March 2008, the new national government can resolve the current economic turmoil on the island and restore confidence in the Taiwan stock market. I will not recommend any entry into Taiwan stock until the March 22 election results

What can foreigners buy?

Only Shanghai and Shenzhen B shares, Hong Kong and Taiwan market open foreigners.

price difference

The same stock between the A shares and B shares of the price difference is significant. Real estate developer giant Wangke A shares, January 28, 2008, than the Shenzhen Stock Exchange B shares rose about 60%. This means that if the investor is bullish on the company, the relative value of the B-share is

Some Chinese companies are listed on the China A and Hong Kong Stock Exchanges. The price of the same stock between the A shares and H shares, for example, Jiangxi Copper in the dynamic PE below 10 (stock code 358) H shares in the January 25, 2008 closing only A shares (stock code 600362) Of the 30%. This shows that the investment value of H shares and the huge gap between A shares and H shares

purchase and sale

in the Shanghai and Shenzhen market to buy A and B market stocks only Can be sold on the next trading day. And there is no "short circuit" allowance for drama. This is quite different from the Hong Kong market and many Western exchanges because the sale of the stock may occur in the next minute after buying or selling the stock

Price Change Limit

A And B shares on the market in China are limited to 5% or 10% of each trading day. Shares closed at $ 10 the previous day are only allowed to move between the lowest $ 9 and the maximum $ 11 limit. These restrictions do not apply to the first trading day of the initial public offering. The rules of the above stock exchange do not apply to the Hong Kong market.

China's stock market trend

local people on the 2005 10-year bull market expectations full of hope. The continued strength will be 10% of the average GDP growth over the past 10 years, the global pressure on the appreciation of the renminbi, the implementation of the new tax policy on January 1, 2008, the success of many large countries to promote the government to further promote the export value of high-end manufacturing As well as China in the 2008 Beijing Olympic Games and the 2010 Shanghai World Expo held several years of major international sports and commercial activities.