H shares and red chips

What are H shares?

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"H shares" are foreign shares issued by enterprises incorporated in the Mainland, mainly listed in China and Hong Kong, and traded in Hong Kong dollars.

H-share companies must comply with the additional requirements stipulated in the Listing Rules of the Main Board of the Stock Exchange or the Growth Enterprise Market. These requirements include: (a) annual accounts must conform to China, Hongkong or international accounting standards; (b) The articles of association of the company shall contain provisions reflecting the different nature of domestic shares and foreign shares (including H shares) and the different rights of the holders concerned; And (c) the articles of association must contain provisions that provide investors with protection equivalent to that of China and Hong Kong.

except for the above additional provisions, the listing procedures and trading methods of H shares are basically the same as those of other China and Hongkong stocks.

investors should note that opening the B-share market does not mean opening the H-share market to domestic residents, and the B-share market and the H-share market are still completely separated. State-owned enterprises that have issued B shares cannot issue H shares at the same time, and vice versa. However, state-owned enterprises can simultaneously issue A shares and H shares.

what is a red chip?

in addition to a, b and h shares issued by state-owned enterprises, another important Chinese concept stock is "red chips". Red chip refers to the shares issued by companies that focus on the mainland in business, assets, market and ownership. Red chips are not incorporated in the mainland, and the par value of the shares is calculated in currencies other than RMB. Another important difference between red-chip companies and state-owned enterprises listed in the Mainland is that the shares issued by red-chip companies are all circulating shares (unlike state-owned enterprises, which divide the share capital into different parts), and they are not divided into "domestic shares" and "foreign shares".

As red chips are not officially established or legally established, their issuance and trading methods are the same as those of other listed companies in China and Hongkong.

what are a and b shares?

A shares

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Domestic shares are called "A shares" and are only for mainland residents to buy and sell. Therefore, people from China, Hongkong and overseas are strictly forbidden to participate in the A-share market, whether through direct trading or through nominee trading.

B shares

In the past, "foreign shares" (those listed in Shenzhen or Shanghai were called "B shares"; The "H shares" listed in China and Hongkong are only for foreigners to buy and sell. A foreigner refers to a person who lives outside the mainland. Therefore, China and Hongkong people are eligible to buy and sell B shares.

On February 19th, 21, China officially announced that mainland residents who legally hold foreign exchange deposits can also invest in the B-share market. This move aims to increase the liquidity of the B-share market. Mainland investors can use foreign exchange deposits (including cash deposits and foreign currency cash deposits) deposited in domestic commercial banks to buy B shares, but foreign currency cash is still not allowed. Before June 1, 21, only domestic residents were allowed to use foreign exchange deposits deposited in domestic commercial banks on or before February 19, 21 to engage in B-share transactions. Since June 1, 21, all legally held foreign exchange deposits can be used for B-share trading.

However, opening the B-share market does not mean opening the H-share market to domestic residents. The B-share market and the H-share market are still completely separated. State-owned enterprises that have issued B shares cannot issue H shares at the same time, and vice versa. This rule basically restricts state-owned enterprises from raising overseas funds only by issuing B shares or H shares (in addition to H shares listed in China and Hongkong, there are also N shares listed in new york and S shares listed in Singapore, etc.). )。

characteristics of a and b shares

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partly due to the control of the capital account (RMB is not freely convertible when it comes to transactions under the capital account; For transactions involving goods and services, A shares must be traded in RMB. B shares listed in Shanghai are bought and sold in US dollars; B shares listed in Shenzhen are traded in Hong Kong dollars.

even though a, b and h shares are different from each other, they all carry the same rights and interests (dividend rights and voting rights are almost the same), and their par values are calculated in RMB.

the methods of settlement of a, b and h shares are also different. A, B shares adopt T+1 and T+3 settlement systems respectively; H shares traded in China and Hongkong are settled at T+2. The mainland market adopts advanced technology for settlement and settlement, so that the settlement procedure can be completed quickly without physical settlement (that is, paperless settlement).

in terms of listing requirements, B-share companies must prepare financial statements in accordance with international accounting standards. H-share companies are required to abide by the accounting standards stipulated in the Listing Rules of the Stock Exchange.

it must be clarified that the state-owned enterprises that issue A shares and B shares (or A shares and H shares) are not dual-listed. This is purely related to the listing of shares of different groups (or classes) in different markets or actually separated due to different currencies of calculation and trading, rather than listing the same class of shares in different markets simultaneously.

blue chip

The word "blue chip" comes from the English word "blue chip", which is a term of Wall Street. In the previous American casinos, the chips used were represented by different colors, and the largest silver chip was represented by blue. Therefore, people use this to call the shares of some large listed companies blue chips, which means that the stock prices of these companies are high enough, the market value is large enough, trading is active, and trading is easy.

In China and Hongkong, there is no accepted criterion for the definition of "blue chip", but most people refer to the constituent stocks of Hang Seng Index as blue chips. Although the Hang Seng Index only includes 33 constituent stocks, these 33 constituent stocks have accounted for 65% to 7% of the total market value of China and Hong Kong stock markets. In other words, although there are more than 6 stocks in the China and Hong Kong stock markets, the market value of 33 Hang Seng Index constituents is already greater than the sum of other stocks. Therefore, the stock price performance of these stocks has a great influence on the trend of the China and Hong Kong stock markets.

Some people suggest that beginners should start with buying and selling blue chips, because blue chips (such as HSBC and Cheung Kong) are slow to rise and fall, with large market value and active trading, which is suitable for long-term investment.

In addition, due to the high share price of blue-chip stocks, the trading amount of each lot is large. For example, HSBC (5) has 4 shares per lot, and if the share price is 1 yuan, it will cost 4, yuan per lot. Therefore, the trading of blue-chip stocks is mainly based on funds (institutional investors), and the investment strategies of funds are mostly in the medium and long term. Generally speaking, if the fund is optimistic about the prospect of a blue-chip stock, they will invest in the medium and long term and will not sell the shares easily, thus forming a stock price that is supported and often grows and grows.

, reference: invested/invested TC/features/stocks/features _ 81 _ 44 _ 124,