How To Buy China Stocks Outside of China, H-Share, A-Share, B-Share (with Cheapest Commission Fee)
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Investing in Chinese stock market is probably one of the best ways to invest in some of the best growing Chinese companies such as Alibaba, Tencent, and BaiDu.
China and United States are the two largest economic superpowers, with US GDP as 24.15% of world’s GDP, and China following closely behind as 18.91% of world’s GDP. Analyst forecast, China’s GDP is projected to overtake U.S. in the 2030s.
As an investor myself, I think it is a great opportunity to explore the Chinese stocks market and probably start invest in Chinese companies. If you are like me, wanting to invest in the Chinese share, this article will be your ultimate guide.
Can Foreigners Invest in Stocks in China?
Foreigners who reside outside of mainland China can invest in Chinese companies listed in mainland China through Hong Kong, Shanghai and Shenzhen Stock Exchange.
Some popular Chinese companies are even listed in The United States, but depending on where the stocks is listed, your access to the different types of china stocks varies.
Major Stock Exchanges in China
There are three major stock exchanges where you can trade stocks in China, where you can get access to China H-Shares, China A-Shares, and China B-Shares.
Stock exchanges in mainland China:
- Shanghai Stock Exchange (SZSE): 2,700 stocks listed on the Shanghai stock exchange with access to both Chinese A-Shares and B-Shares.
- Shenzhen Stock Exchange (SSE): 1,247 stocks listed on the Shenzhen stock exchange with access to both Chinese A-Shares and B-Shares.
Invest in Chinese stocks via stock exchanges created for free trade:
- Hong Kong Stock Exchange (HKEX): 2,597 stocks listed on the Hong Kong stock exchange with access to H-Shares which are the largest and most liquid Chinese companies operating in mainland China. These includes blue chip stocks such as Bank of China, Alibaba and Tencent.
Understanding The Types Of China Stock Structure
Unlike the stock market in the rest of the world such as The United States, Singapore, London, and Japan, China Stocks have a very different structure which you need to know before you should start investing.
| Share Type | Stock Exchange | Open To Foreign Investors | Currency |
|---|---|---|---|
| A-Share | Shanghai or Shenzhen | No, unless through specialized schemes. | RMB |
| B-Share | Shanghai or Shenzhen | Yes, under investment schemes. | USD or HKD |
| H-Share | Hong Kong Stock Exchange (HKEX) | Yes, freely traded. | HKD |
| ADRs | US Stock Exchange | Yes, freely traded. | USD |
Publicly traded Chinese companies generally falls under one of these four types:
- A-Share: Publicly listed Chinese companies on the Chinese Stock Exchange such as Shenzhen and Shanghai Stock exchange, traded in RMB and open to foreign investors through Qualified Foreign Institutional Investor (QFII), RMB Qualified Foreign Institutional Investor (RQFII), or the Stock Connect programs only.
- B-Share: Chinese companies incorporated in China listed on the domestic stock market designed to be traded by foreign investors, where trades are performed in USD on the Shanghai Stock exchange and HKD on the Shenzhen Stock exchange.
- H-Share: Chinese companies incorporated in China and listed and traded on the Hong Kong Exchange, it can be freely traded by anyone using HKD.
- American Depositary Receipts (ADRs): Chinese companies that are incorporated in China but are traded in the U.S. Stock Exchange such as the New York Stock Exchange using US dollars.
How Can I Buy Stocks In China?
China is the world’s second biggest economic powerhouse, and investing in Shanghai or Shenzhen stock exchanges are probably the best ways to get exposure to Chinese equities.
The three best ways to buy China shares are:
- Invest directly in Chinese individual stocks listed in the China Stock Exchange such as the SEE and SZSE through brokerage firm that works directly with the market maker.
- Invest in Chinese companies listed on the Hong Kong Stocks Exchange (HKEX).
- Invest in Chinese EFTs that are listed outside of China.
1. Invest Directly in China Stock Exchange
Investing in shares of Chinese companies directly is the best way for individual investors to trade the largest variety of stocks listed in the China Stock Exchange.
- Shanghai Stock Exchange (SZSE): 2,700 stocks listed on the exchange with access to both A-Shares and B-Shares.
- Shenzhen Stock Exchange (SSE): 1,247 stocks listed on the exchange with access to both A-Shares and B-Shares.
These Chinese exchanges have the most comprehensive list of Chinese securities giving investors access to the widest range of Chinese stocks. However, dividends derived from investing in the China stock exchange are subject to a 10% withholding tax (WHT).
2. Invest in Chinese companies listed on the Hong Kong Stocks Exchange (HKEX)
Hong Kong stock market allows anyone to perform trades freely and easily even if you are a foreigner. Not only there is no capital gain tax, you get to access thousands of Hong Kong shares as well as a number of largest Chinese stocks.
- Hong Kong Stock Exchange (HKEX): 2,597 stocks listed on the Hong Kong stock exchange with access to H-Shares.
With HKEX, you get to invest in some of the biggest names in the industry such as:
- Banking and Finance: Commercial Bank of China, China Construction Bank, China Merchants Bank.
- Telecommunication: China Mobile, China Telecom
- Technology Stocks: BTD, Alibaba, Meituan, Tencent, Bidu, Xiao Mi
3. Invest in Chinese ETFs
Investing in the Chinese ETFs let you gain exposure to the top China stocks listed in Chinese exchange. These ETFs which tracks the indexes of Chinese stocks are often offered by your local stock exchanges.
Like all ETFs, these China EFT allows you to invest in a portfolio of stocks without you needing to pick any individual stocks.
Popular indexes of Chinese Stocks are:
- CSI 300 index: Tracks 300 stocks with the largest market capitalization in mainland China. These largest and most liquid Chinese companies that are traded as China A-Shares on the stock exchanges.
- FTSE China 50 index: Tracks the 50 largest Chinese companies that operate in mainland China and traded on exchanges in Hong Kong or the U.S.
- FTSE China A-H 50 index: Track 50 largest companies that operate in mainland China traded on exchanges such as Hong Kong, Shanghai and Shenzhen, including A-Shares, B-Shares and H-Shares.
Buying China ETFs are probably the easiest way for you to start investing in China companies, but regardless which way you want to invest in the Chinese market, trading Chinese stocks will require you to open a brokerage account that help facilitate your transaction.
Best Platform To Open Brokerage Account To Invest In China Stocks
Investing in Chinese companies listed on the Chinese Stock Exchange requires you to open an brokerage account that allows foreign investing.
These brokerage firm will work with the market maker which is located in the country you want to invest where they will help to facilitate the transaction.
| BROKERAGE | STOCKS EXCHANGE | CHINA SHARE TYPE | MIN. FEES | TRADING COMMISSIONS | CUSTODIAN FEES |
|---|---|---|---|---|---|
| Moomoo | HKEX | H-Share | HKD$15 | 0.03% Trade Value | No custodian fees |
| Tiger Brokers | HKEX | H-Share | HKD$15 | 0.2% Trade Value | No custodian fees |
| Interactive Brokers | HKEX | H-Share | HKD$18 | 0.05% Trade Value | No custodian fees |
| Interactive Brokers | SSE and SZSE | A-Shares | RMB$15 | 0.08% Trade Value | No custodian fees |
| FSMOne | HKEX | H-Share | HKD$50 | 0.08% Trade Value | No custodian fees |
| FSMOne | SSE and SZSE | A-Shares | RMB$40 | 0.08% Trade Value | No custodian fees |
| Saxo Markets | HKEX | H-Share | HKD$90 | 0.15% Trade Value | 0.12% p.a. of daily stock portfolio value charged on a monthly basis, minimum $10 per month |
| Saxo Markets | SSE and SZSE | A-Shares | RMB$40 | 0.15% Trade Value | 0.12% p.a. of daily stock portfolio value charged on a monthly basis, minimum $10 per month |
| Phillip Securities | HKEX | H-Share | HKD$100 | 0.25% Trade Value | No custodian fees |
| Phillip Securities | SSE and SZSE | A-Shares | RMB$0 | 0.03% Trade Value | Daily stock portfolio value x 0.008% / 365 |
| Phillip Securities | SSE and SZSE | B-Shares | USD$30 | 0.30% Trade Value | No custodian fees |
| Lim & Tan Securities | HKEX | H-Share | HKD$80 | 0.12% Trade Value | 0.2% of Portfolio Value |
| Lim & Tan Securities | SSE and SZSE | A-Shares | RMB$88 | 0.25% Trade Value | 0.2% of Portfolio Value |
| Maybank Kim Eng Securities | HKEX | H-Share | HKD$50 | 0.12% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| Maybank Kim Eng Securities | SSE and SZSE | A-Shares | RMB$50 | 0.12% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| DBS Vickers | HKEX | H-Share | HKD$108 | 0.15% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| UOB Kay Hian | HKEX | H-Share | HKD$75 | 0.12% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| UOB Kay Hian | SSE and SZSE | A-Shares | RMB$80 | 0.25% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| OCBC Securities | HKEX | H-Share | HKD$150 | 0.25% Trade Value | S$2 Per Counter Per Month, Max $200 Per Quarter |
| OCBC Securities | SSE and SZSE | A-Shares | RMB$80 | 0.15% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| OCBC Securities | SSE and SZSE | B-Shares | USD$45 | 0.30% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
| CGS-CIMB Securities | SSE and SZSE | B-Shares | HKD$88 | 0.18% Trade Value | S$2 Per Counter Per Month, Max $150 Per Quarter |
Note: Data are consolidated, checked for accuracy and ensure outmost reliability by the Author through hours of research into each of the brokerage platforms, the author aims to provide the most accurate data by following strictly according to our editorial guidelines but always do your own due diligence before investing. Fees changes time from time, these are just for reference only, data updated for China incorporated companies listed on HKEX, SEE and SZSE.
Why Should We Consider Investing In China Stock Market?
As investors, investing in shares of Chinese companies means to take advantage in the growth of the Chinese economy. For the past 30 years, China’s economy have been growing on average 9% per annual.
As the China’s GDP grow, opportunities will arise to allow individual investors like us to buy popular Chinese stocks listed on the China market that have the potential for double digit growth.
Buying China A-shares gives you the most opportunity to get exposed to the Chinese market, China B-Shares offers a wide range of selection as well.
As a foreign investor, I will personally choose to invest in China H-Share which are listed in Hong Kong Stock Exchange (HKEX).
China H-Share are listed on the HKEX, foreigners are allow to trade freely on HKEX, buying and selling any of the H-Shares with ease and enjoying the tax benefit coming from trading in the HKEX.
- No capital gains tax by Hong Kong Inland Revenue Department from the sale of property such as H Shares.
- No dividend income tax by Hong Kong Inland Revenue Department from the dividend earn from owning H Shares.
However, tax may still be applied depend on which country you are currently residing, thus it is best to check with your financial advisor for any tax related matters.
Many top Chinese companies are listed as H-Shares, and some of the most popular companies are:
- Growth stocks such as Chinese technology stocks including Alibaba, MeiTuan, BaiDu, Tencent,
- Dividend stocks such as Bank of China offering high dividend yield to investors.
How to Buy China Shares in Singapore?
Wanted to get started in investing? If you are looking to buy China Shares in Singapore, there are three options to choose form. While each have it’s pros and cons, one of these proves to have more upside than downside.
1. Open A Domestic Brokerage Account
Opening a domestic brokerage account in mainland China or Hong Kong allows you to buy China A-Shares, B-Shares and H-Shares directly from the respective stock exchanges.
Although this allows you to buy Chinese stocks directly, unless you are living in mainland China or Hong Kong, it is very difficult for foreign investors to open a domestic brokerage account.
2. Invest in Singapore listed China ETFs
Investing in Singapore listed China ETFs let you gain exposure to Chinese companies while diversifying your portfolio.
Trading China ETFs will allows you to participate in China’s growth while minimizing the risk of buying selected Chinese companies that may be subjected to high level of fluctuations.
However, you will not be able to invest in a particular stocks such as Tencent, Alibaba, BYD directly.
3. Open An Online Brokerage Account With Access to China Stock Market
Opening an online brokerage account with direct access to China stock market enables investors like you to buy China stocks directly like the locals.
Getting started on investing through major brokers such as Moomoo, give you complete access to a wide variety of Chinese listed companies that are listed on the Chinese stock exchange.
Investing foreign stocks through online brokerage with direct access to the stock exchange is my preferred way to invest in China shares.
Personally, I invest in the Chinese stock market using Moomoo platform. Not only I get complete control in what I invest, the setup process is simple, making investing in foreign stocks such as China stocks from Singapore pretty easy.
Moomoo Is The Best Platform to Buy China Stocks In Singapore
Foreign investors not residing in China can buy China H-Shares stocks listed on the HKEX using Moomoo by setting up your account on the Moomoo platform.
Moomoo is an online brokerage that offers individual investors like to to invest in various stocks markets including:
- Chinese stock exchange listed companies, such as Alibaba, Tencent, and Baidu.
- United States stock exchange listed companies, such as Apple, Google and Meta.
- Singapore stock exchange listed companies, such as Singapore Airline, Raffles Medical, and SGX.
Buying China stocks in Moomoo only takes you a few steps:
- Open an online brokerage account on Moomoo with this link which gives you an exclusive welcome package.
- Fund your newly opened brokerage account using HKD or in SGD currency.
- Exchange your SGD currency into HKD using the Moomoo platform or using Instarem (Low cost currency exchange & money transfer platform).
- Click on the HK stock exchange tab and pick the Chinese listed company to buy.
- Click “Trade” when you want to buy any of the stocks. The stock listed on the HKEX including the China H-Shares will be traded in HKD.
Moomoo makes investing in China listed companies H-Shares through the HK stock exchange as simple as buying stocks listed on the SGX or the US stock market.
Nonetheless, there are some downside to using Moomoo to buy China Stocks; Moomoo don’t give investors the access to China A-Shares and China B-Shares.
However, I personally will choose to use Moomoo to invest in China Stocks due to the following reasons:
- Give foreign investor like us complete access to all the H-Shares listed on the HKEX, which includes all the popular stocks.
- Offers the lowest commission fee to buy and sell Chinese stocks.
- Offers zero custodian fees when trading any of the Chinese stocks.
- Free real-time quotation of China stocks.
- Low risk, zero fees, high interest rate cash account “Moomoo cash plus account” that offers 5% p.a. return guaranteed, an cash account that allows redeem anytime with no lock-in.
- Up-to-date industrial news and advance trading and charting tools.
- Easy-to-use trading platform suitable for both beginner investors and expert investors.
Even when given a choice, I will prefer to trade China H-Shares over A-Shares and B-Shares, because of the ease of trade and tax benefits.
So, are you ready to start investing in China stocks?
Let’s get started by opening your brokerage account with Moomoo and claim your exclusive deal through this link below!
- Extra S$20* FREE Cash Coupon.
- Claim 4 x FREE stock bundle worth S$280* with $10,000 deposit & 8 buy trades.
- Get additional S$260* FREE AAPL stock with $100,000 deposit.
- Earn 31 days 6.8%* p.a. return on idle cash with Moomoo Cash Plus
- Low commission fee for SG and HK stocks, ETFs and options.
- Lifetime $0 commission free* for US stocks.
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Disclaimer: All views expressed in the article are independent opinion of the author, based on my own trading and investing experience. Neither Moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore.
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- Best Trading Platform For Beginners in Singapore (Students, NSF, Fresh Graduates)
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Antony C. is a dividend investor with over 15+ years of investing experience. He’s also the book author of “Start Small, Dream Big“, certified PMP® holder and founder of IncomeBuddies.com (IB). At IB, he share his personal journey and expertise on growing passive income through dividend investing and building online business. Antony has been featured in global news outlet including Yahoo Finance, Nasdaq and Non Fiction Author Association (NFAA).
