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How to invest in Chinese stocks from Australia
The Chinese economy is facing some headwinds, but it remains one of the fastest growing countries over the last decade. Here is how you can invest in its largest businesses listed here and abroad.
China is the world's second-largest economy and is home to the third-largest stock exchange. The companies listed there are some of the biggest businesses in the world including Tencent, Alibaba and BYD.
Find out how you can invest in Chinese stocks from Australia, and what challenges you might face.
Why is it hard to invest in Chinese stocks from Australia?
Most foreigners cannot directly invest in the Shanghai Stock Exchange. Unless you are a Qualified Foreign Institutional Investor (QFII), you can only invest in Chinese companies through exchange-traded funds (ETFs) or index funds. You can invest in Chinese stocks but it's not as easy as investing in other foreign markets, such as US stocks.
You will need a brokerage account that gives you access to the right stock exchanges. While it can be tricky to trade on Chinese stock exchanges directly, you'll find many Chinese-owned companies trade on Australian or US markets.
These markets are much easier to access from Australia. This guide covers either option.
How to buy Chinese stocks from Australia
There are a few ways for Australian investors to add Chinese stocks to their portfolios,
International online brokers. Some international brokerage accounts let you purchase Chinese stocks directly from Chinese exchanges. Just a few brokers in Australia offer direct access to Chinese markets, including Tiger Brokers and Interactive Brokers. Australia's Big 4 Banks currently do not give you access to Chinese markets.
Exchanges. For investors who don't have a brokerage account with access to Asia, numerous Chinese companies also list shares on US exchanges and the Australian Securities Exchange. Brokers offering these markets in Australia are far more numerous.
ETFs. ETFs that track Chinese stocks are another way for Australian investors to diversify into Chinese investments, such as the iShares China Large-Cap ETF.
Types of Chinese stocks
Chinese stocks originate from companies that are headquartered in China. There are multiple Chinese stock exchanges – including the Hong Kong Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
China tech stocks
Not only is China the world's largest exporter, it's also also home to impressive tech stocks names.
When it comes to investing in Chinese tech stocks, much like the Nasdaq, you'll have the choice between some large established players and some growth stocks. Some of the larger more established names include - Alibaba, Tencent, JD.com and Huawei.
China EV stocks
Another area where China is starting to establish itself is through the EV market.
It has a number of challenger brands to Tesla including Nio, Xpeng and Li Auto.
China rare earth stocks
Rare earth metals are used in a number of industrial applications including electronics, clean energy, aerospace, automotive and defence, which makes them vital to everyday life.
As it currently stands, China has roughly 60% of the world's rare earth mining and 85% of the rare earth processing. As such its rare earth shares can be advantageous for investors.
China A-shares vs China B-shares
There are 2 ways to invest in Chinese shares:
China A-shares are the standard shares of mainland Chinese companies listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange. Historically you had to be a Chinese citizen to purchase these shares, but post 2003 they became more widely available.
China A-shares are in the local currency, RMB, while China - B shares are quoted in foreign currencies, usually US dollars and are more widely traded by foreign investors.
You might have difficulties regardless of the option you choose if you're a foreigner. The government still has regulations over China-A shares, and you will have difficulties with exchanges for China-B shares.
Compare trading platforms
Many Chinese stocks can be purchased from a domestic brokerage account. Narrow down your options by comparing features, fees and research tools.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Why invest in Chinese stocks?
China's economy is on the rise and its businesses are poised for growth. China is the world's second-largest economy, second only to the United States. It enjoys this position thanks to an average economic growth rate of over 6% for nearly 30 years, making it the fastest-growing major economy in the world.
China is also the world's largest exporter, boasting an export value of approximately US$2.7 trillion in 2023, according to World Population Review.
In fact, its growth rate has been exceptional over the last decade. The country's year-over-year export growth hovered near 17% from 2002 to 2012. Fast forward to today, it is facing some challenges and is expected to grow by around 1.1% in 2022, according to the IMF.
Chinese stocks listed in Australia
Over 50 Chinese stocks trade on the ASX. You can buy, sell or hold these stocks with a domestic brokerage account the same way you would any Australian stock.
Company summary
Animoca Brands Corporation Limited leverages gamification, blockchain, and artificial intelligence technologies to develop and publish a portfolio of mobile products worldwide. It publishes games, such as The Sandbox, Crazy Kings, Crazy Defense Heroes, Mattel, Astro Boy, F1 Delta Time, Chibi Maruko Chan Dream Stage, Ben 10 Ultimate Alien Xenodrome+, and Norm of the North Digit Dodge, as well as products based on intellectual properties, such as Garfield, Thomas & Friends, Ever After High, and Doraemon. Animoca Brands Corporation Limited is based in Hong Kong.
Historical performance
Stock information
Market capitalization: $147781632
Dividend yield: 0%
Company summary
Accent Resources NL engages in the exploration for, evaluation, and development of mineral properties in Western Australia. The company explores for iron ore, gold, base metals, and precious metal deposits. Its flagship project is the 100% owned Magnetite Range project that comprises five exploration and one mining licence covering an area of approximately 158 square kilometers located in the Midwest region of Western Australia. The company was incorporated in 2005 and is based in West Perth, Australia. Accent Resources NL operates as a subsidiary of Rich Mark Development (Group) Pty Ltd.
Historical performance
Stock information
Market capitalization: $3311889
PEG ratio: 0
Company summary
Astron Corporation Limited operates as a mineral mining and production company. The company operates through Donald Rare Earths & Mineral Sands; China; and Senegal segments. It primarily focuses on the development of the Donald Mineral Sands and Rare Earth Project in regional Victoria. The company is also involved in the operation of titanium-based materials processing activities, including a mineral separation plant at Yingkou, China; and procurement and trading activities, as well as the evaluation and advancement of downstream applications for zircon and titanium. It operates in Australia, China, and internationally. The company was incorporated in 2011 and is based in Minyip, Australia. Astron Corporation Limited operates as a subsidiary of Kobe Investments Ltd.
Historical performance
Stock information
Market capitalization: $102681608
PEG ratio: 0
Company summary
Bojun Agriculture Holdings Limited manufactures and sells food products in China. The company primarily offers fruit vinegar, fruit confectionery, and enzyme drink products. Bojun Agriculture Holdings Limited was founded in 2006 and is based in Sydney, Australia.
Historical performance
Stock information
Market capitalization: $10814568
P/E ratio: 1.1266
Dividend yield: 0%
Company summary
Boyuan Holdings Limited, through its subsidiaries, engages in the property development and management activities in Australia. The company operates through two segments, Property Investment and Management, and Funds Management. It provides property advisory services across the life cycle of residential and commercial developments comprising assistance in site acquisition and development applications, building design, construction, sales, and marketing, as well as property management. The company also manages investment funds. The company was incorporated in 2015 and is based in Sydney, Australia. Boyuan Holdings Limited is a subsidiary of Hong Kong Jianyuan Investment Limited.
Historical performance
Stock information
Market capitalization: $37744300
Dividend yield: 0%
Company summary
Sovran White International Limited engages in processing and selling magnesium, coke, fertilizer, and related products in Western Australia and internationally. The company also offers magnesium alloys, as well as semi-coke, calcium metal, tar oil, and other industrial products. In addition, it is involved in the production of magnesium ingots. The company was formerly known as China Magnesium Corporation Limited and changed its name to Sovran White International Limited in June 2020. Sovran White International Limited was founded in 2007 and is based in Brisbane, Australia.
Historical performance
Stock information
Market capitalization: $5196829
PEG ratio: 0
Dividend yield: 0%
Company summary
Dongfang Modern Agriculture Holding Group Limited engages in the cultivation and sale of various agricultural produce in the People's Republic of China. The company produces citrus fruit tangerines, pomelos, navel oranges, and camellia fruits and related products. It also manufactures and sells food supplements in Australia. The company controls 23 plantations spanning approximately 11,641 hectares in the Ganzhou City District within the Jiangxi Province. Dongfang Modern Agriculture Holding Group Limited sells its products primarily to wholesale customers. The company was founded in 2005 and is based in Brisbane, Australia.
Historical performance
Stock information
Market capitalization: $348896288
P/E ratio: 4.1983
Dividend yield: 0%
Company summary
Eagle Health Holdings Limited develops, produces, markets, and distributes health food products, and nutritional and dietary supplements in China. It offers donkey hide, amino acids, herbal tea, protein powder, lozenge, enzyme, maca, vitamin, ginseng, birds nest, dendrobium candidum, and heme iron series of products. As of May 12, 2019, the company operated 100 Zhang Lao San stores. The company also produces disposable medical masks. Eagle Health Holdings Limited was founded in 2001 and is based in Xiamen, China.
Historical performance
Company summary
Energy Metals Limited operates as a uranium exploration company in Australia. It holds interests in eight exploration projects covering an area of approximately 2,400 square kilometers located in the Northern Territory and Western Australia. The company was formerly known as Energy Metals Pty Ltd. and changed its name to Energy Metals Limited in April 2005. The company was incorporated in 2004 and is based in West Perth, Australia. Energy Metals Limited operates as a subsidiary of China General Nuclear Power Corporation.
Historical performance
Stock information
Market capitalization: $26210376
PEG ratio: 0
Company summary
Fin Resources Limited engages in the exploration and development of mineral properties in Western Australia. The company explore for gold, base metals, graphite, nickel, copper, and cobalt deposits. It holds interests in the Sol Mar project comprising five exploration licenses covering an area of approximately 425 square kilometers; and the McKenzie Springs project that covers an area of approximately 82 square kilometers. The company was formerly known as Orca Energy Limited and changed its name to Fin Resources Limited in April 2018. Fin Resources Limited was incorporated in 1985 and is based in West Perth, Australia.
Historical performance
Company summary
Globe Metals & Mining Limited explores, develops, and invests in the resource sector in Australia and Africa. The company primarily explores for niobium and tantalum deposits. It primarily holds 100% interest in the Kanyika project located in Malawi. The company was formerly known as Globe Uranium Limited. The company was incorporated in 2005 and is headquartered in West Perth, Australia. Globe Metals & Mining Limited operates as a subsidiary of Apollo Metals Investment Co., Limited.
Historical performance
Stock information
Market capitalization: $25682984
PEG ratio: 0
Chinese-listed stocks
There are many well-established Chinese companies that don’t trade on Australian exchanges. If you hold an international brokerage account with access to Hong Kong or Mainland China exchanges, you can purchase shares directly.
Some major Chinese companies include:
China Railway Construction (CWYCY)
China Railway Group (CRWOF)
CITIC Ltd (CTPCF)
Industrial and Commercial Bank of China (IDCBY)
Ping An Insurance (PNGAY)
Which ETFs track Chinese stocks?
Another option for Australian investors interested in adding Chinese stocks to their portfolio is by purchasing ETFs that invest in Chinese companies. While this is a less direct investment than purchasing shares, an ETF that tracks Chinese stocks offers broad exposure to a number of securities as opposed to just one.
iShares China Large-Cap ETF
VanEck Vectors China New Economy ETF
VanEck Vectors FTSE China A50 ETF
Global X MSCI China Consumer Discretionary ETF
Risks of investing in Chinese stocks
Chinese stocks present unique risks. Many Chinese companies are state-owned and ongoing tensions between China, the US and Australia could result in Chinese stocks being delisted from US and even Australian exchanges.
In 2017, there were 102 state-owned enterprises (SOEs) in the Fortune Global 500. Of those SOEs, 75 of them were from China. In fact, there are over 150,000 state-owned enterprises in China according to the China Journal of Accounting Research.
Why does this matter? These SOEs have been accused of receiving unfair advantages, such as low-cost loans, while yielding less competitive returns than their privately run counterparts.
China has plans to reform its SOEs, but it’s difficult to say what this reform will look like or what impact it could have on privately held Chinese companies.
And speaking of reform, ongoing tensions between China and the US have led to the Holding Foreign Companies Accountable Act; a bill introduced by the US Congress that requires companies listed on US exchanges to declare any connections with foreign governments. The bill also states that companies listed on US exchanges must submit to audits of the company’s financial performance.
The bill is problematic for Chinese companies listed on US exchanges and could potentially result in numerous Chinese stocks delisting from US exchanges.
Bottom line
China presents a lucrative growth opportunity for investors looking to diversify into other countries.
There are numerous ways to invest in Chinese stocks from an Australian brokerage account. For those who prefer to invest in Asian markets directly, brokers such as Tiger Brokers and Interactive Brokers offer international brokerage accounts.
Before you open an account, explore available trading platforms by fees and available markets to find the broker that is best positioned to serve your investment goals.
Frequently asked questions
Yes. Some that do include China Mobile, NetEase, PetroChina and Tencent.
The value of your shares may change, but you will retain your share of ownership in the company. Companies forced to delist are typically moved to the OTC market and must change their symbol. But the new Holding Foreign Companies Accountable Act may force Chinese companies to make an offer for any outstanding US shares, take themselves private and relaunch on a new exchange.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
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