How to buy and trade stocks in China
You will spend a lot more on commission fees when doing international transactions. Here is the fee schedule of top US brokers for different countries.
Second, you will have access to other emerging economies that are not as easily accessible through an international broker. For example, Boom Securities in Hong Kong allows transactions in countries like Thailand, Indonesia, and the Philippines in addition to mainland China.
Here’s the good news: you don’t have to buy a plane ticket and fly to China to open a brokerage account. You can do this online and by mail.
The easiest way to trade stocks in China is to set up a brokerage account in Hong Kong. We have a post here on how you can do it.
Step 2: Trade stocks in China
With your new Chinese brokerage account open, now is the time to finally start trading stocks.
I will leave specific stock suggestions for another article. Either way, here’s a quick rundown of what to expect when buying stocks in China.
In total, there are over 2,000 public enterprises on the continent. China has the second largest stock market in the world, although the Tokyo stock exchange is larger than either Shanghai or Shenzhen.
The mechanics of trading stocks in China are similar to virtually everywhere else. You will have access to stop loss orders, market orders, limit orders and other types of transactions
The first trading sessions on the Shanghai and Shenzhen stock exchanges take place between 9:30 a.m. and 11:30 a.m., followed by a 1.5 hour lunch break. Then their second sessions are from 1 p.m. to 3 p.m.
Share categories and more information
Several types of share classes are available in China. Most of the time, you will be looking at the specific class of a stock to determine the market in which you can buy it. Some classes are restricted or cannot be traded at all if you are a foreigner.
A Actions are denominated in renminbi and listed on both the Shanghai and Shenzhen stock exchanges. Chinese A shares were previously only buyable by local investors. As of 2018, they are also available to qualified foreign investors living in Mainland China.
B actions are mainly traded by foreign investors and more widely accessible to non-Chinese. Like A shares, B shares are listed in Shenzhen and Shanghai. The former hosts B shares listed in Hong Kong dollars, while the latter is listed in USD.
In addition, you can only buy certain classes of shares outside of China. H actions are only listed in Hong Kong, N actions At New York, and Fleas shares on the Singapore Stock Exchange.
You are allowed to own all three of these as a foreigner, assuming you have already set up the correct brokerage account.
The Chinese stock market is probably confusing if you are a newcomer. That said, investors who are able to navigate their way through the bureaucracy will have access to a massive and versatile market with great long-term prospects.