Interested in adding Chinese shares to your portfolio? Chinese growth stocks are plentiful and easily accessed from a domestic brokerage account. But the future of these stocks on US exchanges remains uncertain — especially for state-owned enterprises.
Chinese stocks originate from companies that are headquartered in China. Like the US, there are multiple Chinese stock exchanges — including the Hong Kong Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
There are a few ways for US investors to add Chinese stocks to their portfolios, including stocks, exchange-traded funds (ETFs) and American Depositary Receipts (ADRs). With an international brokerage account, you can purchase Chinese stocks directly from Chinese exchanges. Not many US brokers offer international trading, but there are a few that offer access to Asian markets, including Moomoo and Interactive Brokers. For investors who aren’t ready for an international brokerage account, numerous Chinese companies also list shares on the NYSE and Nasdaq, offering investment opportunities for US investors with domestic brokerage accounts.
ETFs that track Chinese stocks are another way for US investors to diversify into Chinese investments. And Chinese ADRs — certificates that represent shares of foreign stock — can be bought and sold from domestic brokerage accounts.
Interactive Brokers offers an impressive range of tools and low fees for active or professional investors.
| Available asset types | Stocks, Bonds, Options, Mutual funds, ETFs, Cryptocurrency, Futures, Forex, Treasury Bills, Precious metals |
|---|---|
| Stock trade fee | $0 |
| Option trade fee |
$0 + $0.15/contract or $0.65/contract |
| Annual fee | 0% |
China’s economy is on the rise, and its businesses are poised for growth. China is the world’s second-largest economy, second only to the United States. And it enjoys this position thanks to an average economic growth rate of over 6% for nearly 30 years, making it the fastest-growing major economy in the world.
China is also the world’s largest exporter, boasting an export value of approximately $2.5 trillion USD in 2019, according to Statista. In fact, the country’s year-over-year export growth hovered near 17% from 2002 to 2012. The bottom line? China is a major driver of economic growth and backing Chinese companies presents a potentially lucrative investment opportunity for US investors.
Chinese stocks present unique risks. Many Chinese companies are state-owned, and ongoing tensions between China and the US could result in Chinese stocks being delisted from US exchanges. In 2017, there were 102 state-owned enterprises (SOEs) in the Fortune Global 500. Of those 102 SOEs, 75 of them were from China. In fact, there are over 150,000 state-owned enterprises in China, according to the China Journal of Accounting Research. Why does this matter? These SOEs have been accused of receiving unfair advantages, like low-cost loans, while yielding less competitive returns than their privately run counterparts. China has plans to reform its SOEs, but it’s difficult to say what this reform will look like or what impact it could have on privately held Chinese companies.
And speaking of reform, ongoing tensions between China and the United States have led to the Holding Foreign Companies Accountable Act: a bill introduced by the US Congress that requires companies listed on US exchanges to declare any connections with foreign governments. The bill also states that companies listed on US exchanges must submit to audits of the company’s financial performance. For Chinese companies listed on US exchanges, the bill is problematic and could potentially result in numerous Chinese stocks delisting from US exchanges.
Over 130 Chinese stocks trade on the New York Stock Exchange and the Nasdaq. You can buy, sell or hold these stocks with a domestic brokerage account the same way you would any US stock.
See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.There are many well-established Chinese companies that don’t trade on US exchanges. If you hold an international brokerage account, you can purchase shares directly from Chinese markets. And investors with domestic brokerage accounts can invest by buying American Depositary Receipts (ADRs) in OTC exchanges. Over 150 Chinese companies are listed in American OTC markets. ADRs can be purchased through any domestic brokerage account that offers access to OTC investments.
Another option for US investors interested in adding Chinese stocks to their portfolio is by purchasing ETFs that invest in Chinese companies. While this is a less direct investment than purchasing shares, an ETF that tracks Chinese stocks offers broad exposure to a number of securities as opposed to just one.
Many Chinese stocks can be purchased from a domestic brokerage account. Narrow down your options by comparing features, fees and research tools.
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There are numerous ways to invest in Chinese stocks from a US brokerage account. And for those who prefer to invest in Asian markets directly, brokers like Moomoo and Interactive Brokers offer international brokerage accounts. Before you open an account, explore available trading platforms by fees and available markets to find the broker that is best positioned to serve your investment goals.
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Finder is not an advisor or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.
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