What Are Red Chip Stocks?

Red chip stocks is the name given to the stocks of Chinese-based companies that are traded on the Hong Kong Stock Exchange. Listing on the Hong Kong Stock Exchange provides foreign investors the opportunity to have a stake in Chinese economic growth.

Name

Red chip stocks are so named because of the color of the Chinese flag.

Scope

Red chip stocks represent 34 companies operating in a wide variety of economic areas including manufacturing, education and infrastructure. In addition, companies also operate in emerging economies such as India. Combined, these red chip companies make up the Hang Seng China-Affiliated Corporations Index.

Growth

Generally, the Chinese economy has shown economic growth for the last 30 years. As the economy continues to industrialize, investors both in China and around the world have been eager to invest and profit from this growth.

Location

Red chip companies are commonly internationally incorporated but headquartered in China. The companies are traded on the Hong Kong Stock Exchange.

Forecast

Economic forecasts for the red chip stocks differ among financial analysts. Investors all over the world may try their luck with the emerging Chinese economy.

References

• Yahoo Finance: Top Performing Red Chip Stocks
• Investopedia: Red Chip Explanation

Resources

• Defining a Red Chip Stock