Chinese shares are near multi-year lows after a pursuing a prolonged Zero COVID policy that has rocked their economy and the share prices of Chinese companies.
This week, early rumours suggest China could be moving towards the end of their severe restrictions and the early market reaction to the unconfirmed rumours saw Chinese equities rally.
However, foreign investors wanting the participate in the any future potential rally in Chinese stocks will find it is not nearly as straight forward as buying stock in the UK, France or the US.
Chinese shares have various listing venues, each with certain criteria attached to them dedicating who can buy them, and how they can be bought.
The main types of Chinese shares are:
- China A-shares
- China B-shares
- China H-shares
China A-shares
Chinese A-shares are shares of domestic Chinese companies that are listed in mainland China either on the Shanghai or Shenzen stock exchanges.
Although A-shares are available to foreign investors, Chinese A-shares are typically quite difficult to access and many UK investors would opt for a fund or China A-shares ETF to gain exposure to the sector. The ishares MSCI China A-shares ETF is a good example.
The largest Chinese A-shares include Kweichou Moutai, China Yangtze Power, China Merchants Bank and Ping An Insurance.
China B-shares
Chinese B-shares are again shares of domestic Chinese companies, listed on the mainland Chinese stock exchanges, but dominated in foreign currencies such as the dollar. B-shares are available to foreign investors and Chinese investors with foreign currency accounts.
China H-shares
Chinese H-shares are the Chinese companies most investors will be familiar with. H-shares are Chinese companies incorporated in mainland China and listed on the Hong Kong Stock Exchange.
H-shares include companies such as Alibaba, Tencent and JD.COM.
Many H-shares are available to buy on US exchanges through ADRs, although there is growing pressure from the SEC on these companies to improve their transparency and concerns some may be delisted.
