Investing in Shanghai (Brief Intro to A and B Shares)

By George P

So far, for a guide to investing in China, there hasn't been much optimism which would lead any readers to actually try investing in China, so here is a scenario.

You have just received a heap of cash, people around you keep saying "Ayaaaa, Shanghai Goo Shi, Hen Hao... Ayyyooooo!". This intrigues you. If only you knew what it all meant. They could be talking about Shanghai's weather, they could be talking about Shanghai's lovely people.

Well, if you heard this, it'd be something along the lines of "Oh my, the Shanghai Stock Market is really good... Oh my!". Enough to make you curious? Of course it is.

Anyway. To invest in Shanghai's market without glitches (well, in an ideal world anyway - since when has anything ever been problem free?), chances are you'll need to get to grips with some of the information that is around - conveniently available, mainly in Chinese.

First off there are two options (in terms of Stocks/Shares):

A Shares - Denominated in RMB (Ren Min Bi - or Chinese Yuan)
B Shares - Denominated in USD

The former can only be traded by native Chinese people, well, obviously to stop those 'foreign devils' from getting too rich! But, if you are like me, there is always a workaround, i.e. find a Chinese friend to open a trading account, or girlfriend, mistress, ayi (maid/cleaner), next door neighbour (that can be trusted)... and so on (I am not saying I have all of the mentioned by the way).

B Shares are denominated in US Dollars, so non-Chinese are free to play around with them to their heart's content. Word of advice though - there does not seem any point in investing in these, as there aren't many to choose from.

Track them here (in English) - be sure to install the Java plugin for your browser:

http://www.sse.com.cn/sseportal/en_us/ps/md/sh_b_qci.jsp (A)
http://www.sse.com.cn/sseportal/en_us/ps/md/sh_b_qci.jsp (B)

Note that the data is 15-mins delayed, but the links above are from the official Shanghai Stock Exchange website. Of course, people like me usually track the SSE Composite Index, which is found here (it is a very good way to pass the time, such a pretty picture):

http://www.sse.com.cn/sseportal/en_us/ps/md/sh_b_qci.jsp

Just some historical data (also found on the SSE website; ignore the 'Delayed B-Share Quotes', this is actually the A-Share):

B-Shares:

There is a real-time tracker, based on Sina.com - all in Chinese naturally, but the details are very obvious, and not hard to work out what means what.

http://finance.sina.com.cn/realstock/company/sh000001/nc.shtml

Naturally, trading stocks/shares personally is not the only way to invest; from personal experience, it gives a nice sense of security investing money via a fund management company (with a good fund-manager), though it doesn't make a difference regarding who manages your investments when the chips are down - the best thing to do is to be clued up on the environment, read lots of news articles, and exercise a lot of common sense (why does that somehow not seem 100% obvious?).

I'll go through some of the Chinese terminology later on, and maybe something on investment funds.

-GP