| Introduction | | | | current economic mess on the island and revive the |
| "China Hot Stocks" is a popular topic among stock | | | | Taiwan stock market confidence. I would not advise |
| investors in the recent years. There are many areas | | | | any move into the Taiwan stocks until the election |
| of differences, as compared to American and | | | | result on March 22nd. |
| European stock markets, need to be understood by | | | | What Foreigners Could Buy? |
| prospective investors if they want to participate in | | | | Only Shanghai and Shenzhen B shares, Hong Kong |
| China's strong bull run from 2005 after the bear was | | | | and Taiwan markets are open to foreigners. The |
| beaten off. | | | | Authority is slowly opening up channels through which |
| Color Codes of Price Movement | | | | foreigners could invest indirectly in the A stocks listed |
| Color codes for price movements are the direct | | | | in Shanghai and Shenzhen exchanges. |
| opposite of the western stock markets. When price | | | | Price Differentials |
| movement is positive as compared to the previous | | | | Prices Differentials between A and B shares of the |
| day's closing price, the instant price will be labeled in | | | | same stock are significant. Real estate developer |
| red color. Reversely, if the price moves down as | | | | giant Wangke's A shares, on January 28th 2008, |
| compared to the previous day's closing, the instant | | | | were traded at about 60% higher than its B shares |
| price at the specific moment will be in green color. | | | | on the Shenzhen Stock Exchange. This means the |
| Shanghai Stock Exchange. | | | | relative significant investment value on B stock if |
| There are 2 boards -A and B shares. Shanghai A | | | | investors are bullish on this company. |
| stocks are traded in Reminbi while Shanghai B are | | | | Some Chinese companies are both listed on the China |
| traded in U.S. Dollars. Due to China currency control | | | | A market and Hong Kong Stock Exchange. Prices |
| policy, local Chinese are limited in holding and trading | | | | Differentials between A and H shares of the same |
| the U.S. Dollar priced Shanghai B shares. So the locals | | | | stock e.g, Jiangxi Copper's H shares with a dynamic |
| mainly traded in the A market while foreigners could | | | | PE of below 10 (Stock code 358) are only 30% of A |
| only trade in the B market. As of January 2008, | | | | shares (Stock code 600362) on the closing day of |
| there are 840 A-share companies listed and 54 | | | | January 25, 2008. This illustrates the investment value |
| B-share counters. You can see that B market is | | | | of the H shares and the unbelievable huge gaps |
| relatively small in size as compared to A | | | | between A and H shares. |
| market.There are companies which are listed both in | | | | Buying and Selling |
| the A and B markets. | | | | Buying of shares in the A and B markets in Shanghai |
| Shenzhen Stock Exchange. | | | | and Shenzhen markets can only be sold on the next |
| There are 2 boards -A and B shares. Shenzhen A | | | | trading day. And there is no "Shorting" allowance for |
| shares are transacted in Reminbi and Shenzhen B are | | | | the play. This is very different as compared to Hong |
| transacted in Hong Kong Dollars. The locals mainly | | | | Kong market and many western exchanges, where |
| trade in the A market due to foreign currency | | | | selling of shares could happen the next minute after |
| control while as foreign entities are restricted to the | | | | you buy or shorting the stock. |
| Hong Kong Dollar priced B shares. As of January | | | | Price Movement Limits |
| 2008, there are 670 stocks listed on Shenzhen A | | | | Price Movements of Chinese stocks on A and B |
| market and only 55 on the B market. B market size is | | | | markets are limited to either 5% or 10% per trading |
| less than 10% of A market. | | | | day. Stock closed at $10 the previous day is only |
| Hong Kong Stock Exchange - H shares (China | | | | allowed to move between the lowest $9 to highest |
| companies or China related companies listed in Hong | | | | $11 limits. These limits do not apply to the 1st trading |
| Kong) and Hong Kong companies' stocks are all | | | | day upon its IPO. And the above Stock Exchange |
| traded in Hong Kong Dollars. Hong Kong's international | | | | rule also does not apply in the Hong Kong market. |
| exposure to western funding, more established | | | | China Stock Market Trend |
| financial and legal systems attracted many China | | | | The locals are hopeful of a 10-year bull run from |
| companies' IPO on Hong Kong Stock Exchange, | | | | 2005. The underlying forces behind the sustaining |
| including many China government linked corporations | | | | strength would be the aggressive GDP growth of |
| such as PetroChina, Bank of China, and China Mobile, | | | | 10% average of the last 10 years, the global |
| China Shenhua. One key private stock listed on HKSE, | | | | pressures for Chinese currency Reminbi appreciation, |
| in late 2007, is Alibaba.com, an online trading platform | | | | the new tax policy which came into effect from |
| for wholesalers by a western-educated Jack Ma. | | | | January 1st 2008, the successful restructuring of |
| Taiwan Stock Exchange's index has been gloomy for | | | | many large-size state-own enterprises, government's |
| almost 10 years. The main negative factor is a | | | | push for higher-end manufacturing to improve export |
| political issue on China's conflict with Taiwan | | | | values further and the major international sports and |
| government and its resultance of one-way drainage | | | | business events to be hosted by China in the nest |
| of investment flow from Taiwan into China. With the | | | | few years such as Beijing Olympics 2008 and |
| upcoming Taiwan Presidential election in March 2008, | | | | Shanghai World Expo 2010. |
| a new Nationalist Government could decode the | | | | |