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Investment Times

China - the passive option

| 24 December 2015 | A A A
China - the passive option

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

You may have read articles on the Chinese market which refer to ‘A’ shares or ‘H’ shares. Chinese equities can therefore be somewhat confusing. In brief, A shares denominated in Renminbi were historically traded primarily by local investors on the Shanghai or Shenzhen exchanges. H shares are denominated in Hong Kong dollars, traded on the Hong Kong stock exchange, and available to all.

The A Share market represents around a seventh of all emerging markets by value, but historic trading restrictions have prevented international investors from accessing this market. This is a market with opportunity. As China moves to liberalise its financial system, more foreign investment is flowing into A shares.

But this is a high risk area too. The index gained over 50% in the first half of 2015 before falling back again. The market has rebounded somewhat since, up 2% for the year. Past performance is not a guide to future returns.

Currently there are no Chinese equity funds on the Wealth 150 list, but investors can access this market via ETFs. ETFs are funds, listed on a stock exchange, that aim to track an index. A number track indices of Chinese A Shares as well as Hong Kong listed companies. Remember all investments can go down as well as up so you could get back less than you invest.

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.