Over the years, the China investment universe has greatly expanded. From being a manufacturing-driven economy to a consumer-led one, the investment opportunities are rapidly increasing in China. This change has also been lead by the open policies of the Chinese government that promote investments from around the globe and direct them to its own capital markets. The regulations have also promoted other enterprises to list in the Chinese capital markets, as well as internationally.
The growing number of options available gives more investment opportunities to customers around the globe. Since the market has lots of potentials, we have witnessed an optimistic approach towards the industry from the customers.
Unlike other major stock markets across the globe, China’s equity markets trade on both the mainland as well as abroad. The shares have a separate class name and have different levels of access to the customers. To understand China investment opportunities, there are a few distinctions to consider.
- Offshore Chinese equities: These are the companies that are listed abroad and available to investors from around the world. This also includes listings from the Hong Kong stock market. This is in tandem with others listings in the US, Singapore, and London markets. The recent trend has been towards the listing of the IT companies in the international market. These listings have further increased the investment options available.
- Onshore Chinese equities: These are the shares listed in the Shanghai or Shenzhen exchanges. These exchanges are not completely accessible to international investors. However, international investors can invest in them through various programs, like Renminbi QFII (RQFII) and Shanghai-Hong Kong Connect.
An excellent way to make China investments is to approach the market with both the markets into consideration. An investor has to understand that both the markets offer distinct products and by taking both of them together, they can earn high returns.
By joining both the forces, onshore and offshore equities, an investor can diversify their portfolio and reduce the risk they carry on their investment. The offshore equities are mainly large financial services companies, followed by telecommunication companies the recent surge in IT companies. On the other hand, the onshore companies are mostly consumer-led companies and other privately owned enterprises.
One of the first lessons taught to any new investor is to diversify their portfolio. By having an investment in such companies, the risk will be lowered down and high returns will be expected. Another reason for investment in China is the large scale of its market. China has grown impressively through the years and now enjoys being among the top equity markets of the world. By market capitalization and size, the options China gives for investments are plenty. As it’s also untapped, it makes the equity market an even hotter product in the sector