How to Invest in the Chinese Stock Market


How to Invest in the Chinese Stock Market. One of the most vibrant stock markets in the global economy resides in China. The Shanghai Stock Exchange plays host to thousands of burgeoning companies that offer shares to millions of investors. Your ability to invest wisely in the Chinese stock market allows you to get in on the ground level of an economy with massive growth potential.

Fill out paperwork and trading agreements with a broker familiar with the Chinese stock market. You must sign an agreement with the broker stating his level of discretion with your funds, as well as open a bank account that is drawn for stock transactions.

Engage in bond repo trading to gain small amounts of profit early in your investing experience. Bond repo trading in the Chinese stock market allows you to purchase bonds from a fellow investor and sell them back to the investor at a predetermined time. These trades provide profit through accrued interest and fees associated with the bonds.

Gather stocks for smaller companies or low performers through the auction-trading process in Shanghai. You instruct your broker to announce a bid price that is high when buying and low when selling so you can beat out other investors. Invest through auction trading only after gaining experience in traditional share buying due to the intensity of auctions.

Track the progress of the Shanghai Stock Exchange and other Chinese markets through the SSE50 and SSE180 indexes. The SSE50 is an index of 50 major Chinese companies, while the SSE180 is a list of 180 companies that represent the country's economy.

Purchase bonds through the SEE Government and Corporate Bond markets in Shanghai. These bonds allow you to invest in the steady growth of China's government and top corporations, with a predetermined selling amount.

Observe sector indexes in the Chinese stock market to find a burgeoning sector in the nation's economy. Focus on the growing real estate and utility markets as China's cities expand outward into the country with population growth.

Tips & Warnings

  • Utilize the principle of block trading in the Shanghai Exchange as you develop a thriving portfolio. Block trades allow investors to sell high-performing stocks as a large lot to maximize returns in a single transaction. Trades of high-level stocks require at least 500,000 shares before a transaction is made.
  • Pay trading fees through your broker to invest legally in the Chinese market. The B Share market, for example, has a 0.2 percent stamp duty on the trade price of a share, as well as a regulatory and trading fee.

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