Stock Investment

With the Chinese economy currently booming, there are news reports that brokerage accounts are being opened in China at an unprecedented rate. Many country citizens have moved to city areas and have newly disposable income that is being diverted to China stock investments. China's insatiable demand for resources, goods and services to fuel its economic growth is also having a flow on effect to other regions of the world. Countries such as Australia, which is primarily resource based, has enjoyed a healthy demand for resource stocks in response to the China 'growth story'.

There are two types of share in China. A and B Class shares. Foreign investors are prohibited from purchasing A class shares. B class shares are usually lower quality state owned shares. Individuals and fund managers who want exposure to China can gain access to China shares by investing in H class shares which are listed on the Hong Kong Stock Exchange. This is the preferred method for foreign investors other than the alternatives available through the US market as listed below.

There are several other alternatives for foreign investment in China. One of the best alternatives is to invest in American Depository Receipts listed in the US markets. These securities are a type of transferable security traded on a local stock exchange but representative of a Chinese publicly listed company. China Mobile Ltd, China Life Insurance, Aluminium Corp of China Ltd, China Telecom Corp Ltd and Petrochina Co Ltd are examples of ADR's traded in the US through the New York or NASDAQ stock exchanges. Investors with a US brokerage account can invest in these stocks the same way they would any other purchase on the US stock market.

Exchange traded funds represent another alternative for exposure to foreign investment in China. Some examples include: IShare FTSE/Xinhau China 25 Index, Powerhouse Golden Dragon Halter USX China and SPDR S & P China. These ETF's are traded through the US exchanges and investors can buy and sell the same way they would traditional shares.

Another way to make China stock investments is to invest in companies that have high exposure to US growth or are actively pursuing growth opportunities in China. Yum brands and the Las Vegas Sands are two companies that are active in China and pursuing opportunities. Other companies listed on worldwide exchanges have exposure to demand for Chinese resources. Many Australian companies are enjoying a healthy demand from Chinese companies for supply arrangements. Investors who investigate foreign alternatives can uncover potential China stock investment candidates.

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