Financial news is packed with information about the Chinese stock market. Experts discuss stocks that are worth buying in articles and analytics provide companies’ overviews to make it clear what investment will be profitable in 2024.
This article will provide readers with complete information about the stock market in China, as well as valuable tips on buying money-making firms’ shares.
Chinese stock market overview
China is one of the most advanced and technically developed countries in the world. Its economy is growing annually, maturing and creating more and more opportunities for various industries. Approximately 35 million companies have been registered in the country, and each of them occupies a certain place in its economy and specific industry. Of course, not every firm is worth investing in. While some businesses thrive and develop constantly, others don’t succeed and get left behind their competitors.
The Chinese stock market is represented by the Shanghai Stock Exchange, which has been established in Shanghai, by reference to its title. It is the fourth biggest stock market in the world with a capitalization estimated at four trillion dollars. The Shanghai Stock Exchange has several drawbacks, among which are:
- strong dependence on China’s government and its frequent influence;
- capital account controlled by bodies of authority;
- closed nature for citizens of other countries.
The organization is regulated mainly by the China Securities Regulatory Commission, and Shanghai Clearing House ensures that investors operate in a safe environment. In addition to this, the latter is responsible for various tasks related to consulting, clearing, and management.
It is noteworthy that SSE is a complex eco-system, which consists of several parts. It includes funds, bonds, and, of course, stocks. Stocks are divided into two categories – A and B. The first type is available only in the Chinese domestic currency – renminbi or yuan. Moreover, only official citizens of China can purchase these shares, and it is prohibited for overseas investors. The B type is available to investors in a foreign currency – dollars. Both local and nondomestic investors can buy them. It is important to mention that, starting from 2002, foreign traders have a very restricted right to purchase A-type shares as well.
The Shanghai Stock Exchange isn’t the only stock market in China. Another popular and second-largest market is the Shenzhen Stock Exchange. Based in Shenzhen, this organization is estimated at 2.5 trillion dollars.
As for the rest, the stock exchanges are very similar to each other. They operate from Monday to Friday, and investors are allowed to trade at set hours.
How to invest in China stocks like an expert
In general, the Chinese stock market isn’t difficult. It isn’t a complicated task to understand all procedures necessary for trading. The main and more important skill is to choose companies with stocks that can become profitable in the future.
To do this, gain insight into the sectors, which are developed in the country most of all. It goes without saying that the high technology vertical is a sole leader. At the same time, many other industry sectors are on the rise in Celestial Empire nowadays. They include:
- manufacturing;
- real estate;
- financial sector;
- scientific research;
- energy.
According to recent data, these sectors are the most attractive for overseas investors. However, the increase of the foreign direct investment rate is mostly fuelled by the tech segment. Only a couple of years ago, the country occupied second place in the world (after the US) in terms of FDI receiving. It remains the biggest recipient in Asia. The Chinese government takes steps towards innovation in the law, which can lead to a reform in the investment sector. It isn’t surprising because such countries as the US, Germany, South Korea, Japan, and many more are interested in investing in China’s business.
To summarize the information provided above, here is the list of experts’ tips on how to invest like a pro:
- Choose companies, which operate in the verticals supported by the government.
- Focus on the long-term opportunity.
- Invest through affiliate companies.
- Stay informed about all changes in the Chinese stock market, and the country in general.
- Explore the fees and taxes applicable to such operations.
- Use the list of top companies to invest in.
Hot stocks to buy this year
With the above-mentioned information in mind, potential investors can consider the following companies for buying shares.
Alibaba Group Holding Limited
This company has always been interesting for investors, especially for the US ones. The international technology holding group comprises several niches, including retail, web solutions, and e-commerce. It covers three sectors – B2B, B2C, and C2C. Its main focus is sales services based on e-payments, retail platforms, artificial intelligence technology, and cloud computing.
The company is a real giant in the e-commerce world and, undoubtedly, one of the best firms to entrust your money to. Being an intermediary between merchants and buyers, it combined a number of business models and succeeded. This led to its IPO of twenty-five billion dollars in 2014, which became the biggest IPO ever. Alibaba’s list of achievements is endless, and it is a leader in many business and financial rankings.
The current price of the company’s stock is approximately $267, and it continues to rise. Experts predict that its revenue will only increase during the next five years. That is why its shares are an attractive investment, especially from a long-term perspective.
ZTO Express
ZTO Express is a logistics firm that is also worth considering. It has shown continuous growth during 2020, and analysts are sure that it is the best company to invest in this year. The forecast about it remains positive as its ZTO Express’ delivery network covers the majority of China’s regions and cities, which has a direct impact on its revenue.
The company could grow its earnings per share by twenty-three percent during three years, which is a good sign for its shareholders. Its stock is estimated at $30.90.
Lufax
This company is certainly an unconventional choice. Its shares aren’t so popular among investors, however, the fintech firm can become a strong market player in the nearest future. Lufax is oriented towards services connected with the management of personal finances. Unlike its competitors, the company is more focused on individuals than on legal entities.
Many experts confirm that investments in Lufax can be profitable because it is improving its profit margins constantly. The support from Ping An Group, its parent company, allows the firm to stay afloat and thrive. Ping An Group provides its subsidiary business with access to more than 200 million customers. In addition to this, according to the Lufax representatives, the company is unique because it offers exclusive wealth management solutions for the Chinese middle class. This niche isn’t occupied by many companies nowadays. Lufax’s stock price is $14.53.
Huya
If you are dreaming of purchasing esports stocks, of course, the US stock market can offer you a wider range of firms for investing in. However, China is popular for its tech solutions and platforms related to the esports industry.
One of them is Huya – a game streaming service, which is an Asian Twitch competitor. Except for streaming game tournaments, this platform also includes such genres as cooking, real life, and other types of live videos.
In general, it can also become a profitable investment as the esports market continues to grow, together with streaming services. Huya’s share cost is $23.39.
TAL Education Group
It may sound surprising but the education sector develops rapidly in China as well. The combination of innovative technologies allows educational platforms to increase revenue and draw investors’ attention.
TAL Education Group is a company that specializes in tutoring services. While its vertical may seem not very revenue-generating, this platform occupies the sixth position in the ranking of the top ten Chinese stocks to purchase in 2024. The current stock price is $68.09.
Where to find cheap stocks?
It is needless to say that not all individuals have enough money to invest in the largest Chinese companies. Moreover, if you are a newcomer to the stocks market and don’t have much expertise in it, it is better to start with cheap stocks. Smaller risks and the opportunity to gain experience in stock trading are obvious advantages.
There are no extra tips on how to find platforms that offer cheap companies’ shares. Usually, investors search for this information on the web, on the most popular and reliable websites dedicated to stocks. For you not to spend time on this, we have prepared the list of the best stocks, which don’t cost much.
Chinese cheap stocks to buy now
Investors decide themselves whether a stock is expensive or cheap. However, the Chinese stock market has several variants, which are considered low-cost. Here are some of them:
- Huami (~$15). The company develops smart wearables and is one of Xiaomi’s main partners. In addition to collaborations, it creates its branded products, the number of which continues to increase. Huami is also much interested in the healthcare industry and makes financial injections there. The chances are that the firm will succeed in this field shortly.
- Momo (~$15). This mobile social network allows users to communicate with people nearby. As a mobile app, it includes many tools and features. In 2014, the company has announced that its app is used by over sixty million people. It has plans to add monetization to its products via partnerships with e-commerce platforms.
- Vipshop (~$29). The electronic commerce website offering discounts, with more than fifty million customers, has the third position in the ranking of the largest internet commerce companies in China.
- Weibo Corporation (~$42). Weibo is a social network, which has more than 500 million monthly users. Recently, the company has provided a report stating that its performance and revenue in 2020 haven’t been damaged by the pandemic. Vice versa, the lockdown urged people to use its service, and it resulted in a profit.
- JOYY (~$76). This social media platform is oriented toward video content. It combines several directions, which makes it unique as a product. Gaming streams, communication, and online entertainment rolled into one. Keeping in mind this advantageous combination, it is expected that JOYY may become a strong competitor for many services, including social media and streaming websites.
The most popular stocks now
Speaking about Chinese market-leading shares, we can’t but mention that they attract investors from various corners of the world. The data on stocks’ popularity differ by countries but, in general, the demand for certain companies remains the same in the majority of regions.
Here is the list of the most popular stocks in China.
- JD.com. This Beijing-based company is much invested from the US, although Tesla stocks remain extremely popular in the country. Its business-to-customer digital retail services keep more than fifty percent of the Chinese market share. As the country’s electronic commerce sector is rising continuously and thriving, investors see great opportunities in this company. While the pandemic had a negative impact on the majority of retail businesses, JD.com. managed to earn more profit and absorb the bigger part of the market.
- NetEase. If you monitor top esports teams and are into video games, this company may interest you. It is a computer games developer, which has created such titles as Westward Journey, Ghost II, and Heroes of Tang Dynasty Zero. It partners with many developers worldwide and has expanded to such markets as North America and Japan.
- Pinduoduo. If you think that only the e-commerce vertical and social networks are top products to invest in China, you are mistaken. Undoubtedly, the country is much focused on the IT sector but, at the same time, it can be applied to other industries easily. Pinduoduo is the proof of this. It is a digital agriculture-related platform that serves as a link between farmers and consumers. The concept of this business is innovative, and it results in a huge potential for further development.
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