Direct individual purchase of stock by foreigners in Chinese companies is prohibited by Chinese law. That doesn't mean that you can't invest in Chinese companies or profit from Chinese economic growth, however. There is a number of indirect investment methods that can help you profit from growth in the Chinese market. One is to buy stock in an institution that has large holdings of Chinese stock. Another is to invest in a mutual fund that focuses on Chinese stock.
Buy Chinese B class shares or Hong Kong H class shares. Contact your stock broker to purchase shares in listed companies that invest heavily in these shares. Hong Kong H class shares are shares of companies incorporated in mainland China but approved for listing on the Hong Kong index. Chinese B class shares are shares specifically set aside for purchase by foreign institutional investors. They are denominated in renminbi but listed on the Shanghai exchange in U.S. dollars.
Buy mutual funds or exchange-traded funds, or ETFs, through your broker. These funds are primarily or completely invested in Chinese class B shares or Hong Kong class H shares. According to TheStreet.com, these funds have not only closely matched the growth patterns of their underlying securities, they are among the highest-performing funds available.
Consult your broker about possible emerging investment opportunities. Rules and regulations on Chinese stock investing evolve very quickly and there might be new ways to invest in Chinese stocks other than indirect investing.
Tips & Warnings
- Investing in companies with a large Chinese presence is a good way to profit from Chinese growth without indirectly investing in firms holding large blocks of Chinese stock. For example, investing in Google would put you in a good position to profit from the growth of Google's Google.cn properties. Investing in economies closely tied to China is another way to profit from Chinese growth. Taiwanese, Malaysian and South Korean companies invest heavily in Chinese manufacturing. Investing in manufacturers in these countries means you are indirectly investing in Chinese manufacturing interests.
- Although the Chinese economy and stocks have done astoundingly well, even in the face of a global recession, this is not a guarantee of future performance. This is true both for individual companies, groups of companies invested via mutual funds, and with the overall Chinese economy in general. Investing in China involves significant risk as well as significant rewards.
How to Invest in China
Investors are paying close attention to China, a powerful economic force with the largest population in the world. There is a trend...
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...
How to Buy Shares Anywhere in the World Online
The global economy has made the world smaller. And thanks to the internet, anyone can take advantage of booming markets no matter...
How to Buy a Business in China
China has various rules and regulations designed to make it difficult for foreigners to directly control businesses there. It is possible to...
How to Sell a Wyndham Timeshare
Purchasing points at a Wyndham time-share resort might have seemed like a good idea at the time you did it, but later...
How to Buy NYSE Shares
The New York Stock Exchange (NYSE) is the world's largest stock market by market value of the shares listed. In 2007, the...
How to Buy Shares on the Taiwan Stock Exchange
Since Taiwan Stock Exchange (TWSE) started trading in February 1962, it has been the primary Taiwanese stock exchange. Companies traded on the...
Can I Buy Shares Directly From Companies?
In most cases when you buy stock in a company through a broker, you are buying shares from the marketplace rather than...
About Chinese Penny Stocks
Chinese penny stocks offer a great opportunity for making money because the Chinese market has been down substantially, but it can be...