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, home to the third largest stock exchange and allows you to invest in some of the biggest businesses in the world including Tencent, Alibaba and BYD.
But buying Chinese stocks can be relatively difficult.
You will need a brokerage account that allows you to access 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.
What are 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.
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.
China also excels in a number of areas which should attract investors:
China tech stocks
Not only is China the world's largest exporter, it 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 it a 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 it's rare earth shares can be advantageous for investors.
China A-shares vs China B-shares
When it comes to investing in Chinese shares there's 2 options.
China A-shares are the standard shares of mainland Chinese companies that are 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.
Regardless of which you choose you might have some difficulties if you're a foreigner. The government still has regulations over China-A shares and for China-B shares you'll have exchange difficulties.
How to buy Chinese stocks from Australia
There are a few ways for Australian investors to add Chinese stocks to their portfolios, including stocks and exchange-traded funds.
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.
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 that track Chinese stocks are another way for Australian investors to diversify into Chinese investments, such as the iShares China Large-Cap ETF.
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.
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.
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 and 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, like 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 United States 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.
For Chinese companies listed on US exchanges, the bill is problematic and could potentially result in numerous Chinese stocks delisting from US exchanges.
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. And for those who prefer to invest in Asian markets directly, brokers like 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
More guides on Finder
How to buy OpenAI stock in Australia
Looking to jump on the AI bandwagon? Here's how you can invest in ChatGPT and its parent company OpenAI from Australia.
Best performing stocks on the ASX in 2023 (Updated weekly)
Looking for the best performing stocks in Australia? We update this list weekly.
Cryptocurrency ETFs explained: A simple guide for investors (2023)
If you’re looking for ways to gain exposure to Bitcoin and other digital currencies, cryptocurrency ETFs could be worth exploring. Find out what crypto ETFs are and how they work in this introductory guide.
How to buy Gol Linhas Aereas Inteligentes SA ADR (GOL) shares in Australia
Steps to owning and managing Gol Linhas Aéreas Inteligentes SA shares from Australia.
How to buy Microsoft (MSFT) shares in Australia
Steps to owning and managing Microsoft shares from in Australia.
A beginner’s guide to Lego investing
Looking for alternative investments? With a ROI of up to 3,593% lego may be worth considering. Read on to find out which lego sets are worth the investment.
The cheapest stock brokers in Australia (Dec 2023)
Find cheap stock brokerage in Australia when buying and selling shares on the ASX and other international exchanges.
What is the money market?
Learn about the money market and everyday consumer money market products.
Is investing in crowdfunding a safe investment?
Equity crowdfunding offers a unique opportunity for investors and for Australian startups, but Australia’s regulatory framework surrounding crowdfunding still lags behind the rest of the world.
The best trading platforms in Australia for 2023
Follow these tips to find the best share trading platform for you.
Ask an Expert