The country is a hub for low-cost manufacturing, attracting electronics and technology giants from all around the world. It is one of the most lucrative investment opportunities in terms of infrastructural development, an evidence of which is its Silk Road initiative as well as numerous development projects being undertaken within the country.
As a result of these factors, China is an investment opportunity that is hard to resist, but before making the decision of owning a chunk of the country’s stock market, it is imperative that you understand a few basic things.
Overview of the Chinese economy
The Chinese economy is one that has demonstrated one of the most robust growths in the past decade. It has risen quite rapidly to claim the second spot behind the USA and continues to pressure the world’s largest economy with the prospects of stealing the first spot. In the first three months of 2018, the economy demonstrated a growth of around 6.7% in its GDP. While experts believe this will fall, officials still remain positive that the 6.5% growth mark will be maintained.
Investing in the equity market
China has three stock exchanges, i.e. the Shanghai, Shenzhen and the Hong Kong Stock Exchanges. All the shares listed in the Shanghai and Shenzhen bourses are classified into A and B shares. Hong Kong falls under a separate regulatory authority and its investors have only recently been granted the access to trade in Chinese A shares.
The equity market has been registering a drop in recent weeks because of the ongoing tensions between China and the US on matters of bilateral trade with both countries threatening of imposing trade tariffs on the other.
The sectors that show the healthiest growthDespite tensions, Chinese equity markets continue to remain one of the strongest anywhere in the world. The technology and IPO sections are two of the healthiest avenues currently.
Technology - The year on year revenue of the global technology sector has posted a 10.7% increase with NASDAQ-100 swelling to 4000 points in 2017. Although the overall technology sector in the Chinese Stock market only grew by 3% in 2017, individual companies and their stocks have shown considerable improvements. Tech giants like Alibaba Group Holdings continue to list on international stock exchanges while local organizations like China United Network Communications Ltd. have seen a surge of more than 100% in their stock prices over the years.
IPOs - In the first three months of 2018, eight Chinese companies were able to raise more than $3.3 billion in the US because of an increased potential in the market. This occurred despite the fact that there are mounting tensions amongst the two countries regarding bilateral trade and balance of payments.
Trends that are expected to emerge this yearThere are a number of trends that experts believe can help investors predict the appropriate stocks to invest in. These include:
With prospects being healthy, Chinese Stock Market continues to be a force to be reckoned with in the global arena and a lucrative place for investors to generate substantial returns.
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