Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

H-Shares

What it is:

H-shares are shares of Chinese companies that are listed on the Hong Kong Stock Exchange.

How it works (Example):

Hong Kong is a "special administrative region" of China. It was a British colony from the 1830s to 1997. Despite China's status as a communist country, Hong Kong is a major center of global capitalism and is a large financial center.

H-shares are denominated in Hong Kong dollars and are included in the Hang Seng China Enterprise Index.

Why it Matters:

In 2007, China allowed mainland Chinese investors to buy H-shares. Previously, these investors were only allowed to buy Shanghai-listed A-shares of listed companies (many of which were the same companies as those issuing H-shares). Foreign investors can buy and trade H-shares, which makes them more liquid than A-shares. Accordingly, the spread between the A-shares and H-shares of the same company can be very high.