Investing in China

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Following on from Saturday’s issue on the large amounts of money flowing into China and Hong Kong in the last few months, particularly from large institutional investors in the US and Europe (see Free Flow if you missed it), a number of readers have asked me for ideas to help them invest in the China growth story themselves. Here are some of the options:

  • Open a brokerage account in China and invest directly into China A shares in Shanghai or Shenzhen, or via Hong Kong’s Stock Connect
  • Invest in Chinese companies listed on foreign stock exchanges, notably in Hong Kong, US, UK, Australia etc.
  • Invest in Mutual Funds managed by local Chinese based fund managers based in China, or from overseas
  • Buy shares in the many Exchange Traded Funds (ETFs) which invest directly into Chinese stocks and allow you to select a mix of shares that suits your preferences (eg large caps, technology stocks etc.)
  • Invest in Mutual Funds which invest across Asia and Emerging Markets, including China, which enables you to diversify your exposure and access Asian companies who are benefiting from China’s growth but are listed in other markets (e.g. Singapore, India, Taiwan, Korea)
  • Invest in global multi-national companies with substantial business interests in China which are listed in mature and highly liquid overseas markets (eg New York, London etc.)

You should of course take financial advice on the risks, costs and criteria for selecting any of the above options (and/or others) based on your own personal circumstances, risk appetite and long term objectives, but I hope the above is a helpful guide. Motley Fool have written a useful summary designed for retail investors considering their options in the only economy showing positive GDP growth this year (1.9% growth predicted for 2020) with a faster-than-expected recovery to 8.2% GDP growth in 2021.

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