When we talk about economies with the most rapid growth rate, China is the only country that tops the list. In such a short time, the Chinese economy has taken a massive leap to reach where it is today. Besides having the world’s biggest retail B2B industry, it has the largest smartphone and car markets, surpassing the United States. Not just that, China is also set to become the leading contributors to the global economy leaving behind the U.S, Russia and France.
With this incredible economic growth, there comes a bundle of opportunities for foreign investors to capitalise in the Chinese Stock Markets. If you’re planning for something similar, this guide shall be very useful to you.
Why should you consider the Chinese Stock Market?
The most important reason why you need to invest in China stocks is their rapid growth. Everything from, planned urbanization and infrastructure developments to investments in airports, railways, commercial building and industries, China has turned itself into a global center of attention.
The country also has the largest consumer market with the highest retail sales and e-commerce developments – 5.6 trillion US$ in just a year! This is the best time to invest in the Chinese Stock market since it is in its evolving phases.
How to Invest in China Stocks?
There are a few ways to get you started. Firstly, to buy stocks listed on the Chinese exchanges, you will need to open a brokerage account with any Chinese firm. You can look up Shanghai, Hong Kong or any Shenzhen stock exchanges for reference. If you are from the U.S, you can conveniently buy shares from an ETF, Exchange Traded Fund, which comprises of shares and trades them like stocks.
Lastly, you can buy stocks that are currently trading over the counter or on the pink sheets. They are easily available to American investors with beneficial profits.
What to look for when investing in China Stocks?
Before looking for any specific stocks, investors must evaluate their options and check for any potential risks. They should look for the following metrics:
- Revenue: The main factor to check if the stock will be useful to you in the coming future or not is through its revenue growth. Check if its growth is 20% or more, which will determine if the company is growing rapidly along with the country’s economic growth.
- Relationships with other Brands: investors should look for companies that have promising relationships with smaller companies and helping in their growth too. Just like Alibaba who have been investing in many smaller businesses like JD.com, Baozun and Uxin.
- Have competitive Advantage: in a fast-growing Chinese market, it is important for companies to have a competitive advantage over others so they can translate bigger returns and profits in comparison to their rival businesses.
Best Chinese Stock Markets that you can Invest In
The best trending China stocks will bring profitable growth, long-term revenue and various business opportunities in China. If you are a foreign investor, take a look at some of the best stocks you can buy:
The best and most reliable Chinese stocks that you can invest in right now is Alibaba. With a five-year return of 85.6 per cent, this e-commerce giant provides a massive opportunity for American Investors. It has partnered with a number of global brands like Nike, H&M, Estee Lauder and Starbucks for delivery, payments and online purchases. Its network of e-commerce has grown 51% in 2019, with organic revenue growth all over its subsidiaries. Seeing this incredible growth rate, Alibaba can the best companies to start with. Not just that, it is evident that it will continue to sell the same way in the marketplace, bringing back higher returns.
Another online retail store and Alibaba’s main competitor, JD.com has also come a long way to boost the e-commerce industry in the country. It has more than 550 warehouses, have its own logistics and product delivery service, largest direct online sales and partnerships with major Chinese companies. JD.com has invested in implementing technology such as drone deliveries and robotics in its warehouses to automate and speed up the delivery process. JD’s growing strengths and expansion pins high hopes for its long-term growth in China.