Progress has been slow for some Chinese stocks and emerging markets for a number of years. However, world events have accelerated progress. It looks like traders have been investing in businesses in China to try and take advantage of this growth.
Let’s take a look at what’s happening in the global markets and see what we can learn from recent trading action.
[top_pitch]
What is China’s main stock market?
China actually has a few different stock markets. Each one is based in a different city around the country.
The Shanghai Stock Exchange (SSE) is the oldest and most prominent place for trading shares in China.
It’s had an interesting time since it was created. The exchange actually closed down for 41 years during China’s ‘cultural revolution’ but opened up again for business in the 1990s.
Which Chinese stocks have traders been buying?
Research from Fineco highlights a number of different stocks that have been popular amongst traders.
The top three seeing a lot of buzz are:
1. JD.com, Inc. (JD)
This is China’s largest online retailer dealing directly with consumers. You can think of them like a Chinese version of Amazon.
Their shares have seen a lot of movement, heading both ways. Just as many shares have been bought as have been sold. So it’s a pretty even split between traders who want to offload shares and traders who want to pick up more of this interesting Chinese stock.
2. Wah Fu Education Group Limited (WAFU)
Just about everything is moving online these days. Even teaching.
Online teaching was already popular in China before the coronavirus pandemic. But events over the last year have only served to super-charge this learning trend.
Again, traders are split down the middle between buyers and sellers. Some investors may see more growth in online education, whereas others might believe there is going to be less demand.
3. GSX Techedu Inc. (GSX)
This is another company focusing on online education. It’s based in Bejing and uses technology to offer things like after-school tutoring and English courses.
The company has had a tough time since the end of January and its share price has come tumbling down from recent highs. Trading action is going both ways. Some people think this is a bargain with decent upside. Other traders believe that this downward spiral might continue further.
[middle_pitch]
Can you invest in Chinese stocks?
Investing directly into Chinese markets and businesses can be a bit of a tricky business. However, a lot of businesses in China realise this might put off investors.
So something that you might notice when researching Chinese companies for investment is that a lot of them are actually listed on US stock exchanges like the NYSE and the NASDAQ.
This makes things simpler for investors, which in turn makes it easier for these companies to raise money.
What are the best Chinese stocks to buy?
Choosing companies to invest in always takes a lot of research and there are so many factors to consider before buying shares.
Investing in Chinese businesses can be an even tougher task. Eastern culture and markets operate in different ways than we are familiar with. Investing always carries risk and diving into unknown places like China can make things more difficult.
With this in mind, I think some of the best ways to invest in Chinese companies is with the help of professionals. You can use your share dealing account to buy into things like investment trusts that can pick out leaders in these markets for you.
For more of a hands-off approach, you can always use a cheap share dealing platform to invest in something like an emerging markets index fund. Such funds will likely contain some top Chinese companies along with other performers from different countries. This will give you more diversification and may be a safer play than joining the traders.
