Mainland Hong Kong Stock Investment Guide: How to Buy Chinese Stocks? A Complete Guide to A-shares, Hong Kong Stocks, and US Stocks

Are Chinese Concept Stocks, A-shares, and Hong Kong Stocks Confusing?

The threshold for investing in Chinese stocks may seem complicated, but the core logic is quite simple.

A-shares refer to stocks listed on domestic Chinese exchanges, including the Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange, all priced in RMB. Since China’s stock market developed relatively late (Shanghai and Shenzhen exchanges were established in 1990, and Beijing Stock Exchange only opened in 2021), the market rules are relatively simplified, leading many high-quality Chinese companies to choose overseas listings.

Chinese companies listed in Hong Kong and the US are collectively called Chinese Concept Stocks. These include tech giants like Alibaba, Tencent, Pinduoduo, and others. When combined with A-shares, the broad “Chinese stock market investment” refers to a diversified allocation of these two major categories.

Why Have Chinese Concept Stocks Outperformed A-shares? An Analysis of Three Major Factors

Recently, favorable Chinese policies have been frequently announced—interest rate cuts and lower down payments for the housing market, along with stock market incentives for share buybacks and major shareholder increases. However, in actual performance, Chinese Concept Stocks have surged far more than A-shares, mainly due to three reasons:

Differences in Capital Liquidity: Hong Kong and US markets attract more foreign investment, making international capital inflows easier and pushing up stock prices.

Different Valuation Systems: Overseas markets are more optimistic about the growth potential of Chinese companies, assigning higher valuations.

Market Regulation Maturity: Hong Kong and US markets have higher transparency, boosting investor confidence.

Therefore, this introduction will focus on Chinese companies listed overseas.

Notable Chinese Stocks and ETFs in Mainland-Hong Kong Markets

1. Tencent Holdings (0700.HK)

Listing Location: Hong Kong

Tencent is the largest market cap among Chinese companies listed both domestically and internationally. Starting as a software development giant, Tencent has evolved into a comprehensive empire encompassing gaming, social media, advertising, and fintech.

Gaming remains its most significant cash cow, while AI-driven immersive short videos have driven advertising revenue growth. Notably, Tencent’s large portfolio of equity investments has become another growth engine—top holdings include Pinduoduo, Meituan, Kuaishou, Shopee, with shareholdings over 14%. The growth of these invested companies directly reflects in Tencent’s asset expansion.

2. Pinduoduo (PDD.US)

Listing Location: United States

Founded in 2015, this e-commerce newcomer rapidly gained market share during the economic downturn through its “cut one” model. While competitors struggled with declining profitability, Pinduoduo expanded against the trend with extremely low customer acquisition costs.

After successful validation in China, Pinduoduo launched its international platform Temu, which is currently profitable and expected to break even in Q4.

3. Vanke (2202.HK)

Listing Location: Hong Kong/China

This leading real estate company in first-tier cities is unique due to its shareholder background—Shenzhen Metro holds shares, giving it a semi-state-owned nature. When favorable policies are announced, Vanke is among the first to receive support through joint bank loans.

Currently, Vanke’s price-to-book ratio is only 0.3~0.4, reflecting cautious market sentiment about real estate recovery. However, if policy effectiveness is believed, Vanke with high-quality land and projects in super first-tier cities will benefit most from policy dividends.

4. BYD (1211.HK)

Listing Location: Hong Kong/China

From a battery manufacturer to a global electric vehicle leader, BYD is now ranked second worldwide, just behind Tesla.

Its advantage lies in strong supply chain management; even with prices significantly lower than Tesla, its gross margin is comparable. Its mobile parts and assembly business also benefit from AI application expansion.

5. Ping An Insurance (2318.HK)

Listing Location: Hong Kong/China

As China’s most comprehensive financial group, it holds licenses for banking, securities, insurance, and asset management. The insurance penetration rate in China remains relatively low globally, offering huge growth potential.

In the first half of 2024, insurance business saw steady growth, with increases across life, property, and health insurance orders. Coupled with loose monetary policies, financial institutions’ lending and product sales are expected to enter a prosperous cycle.

6. FXI (China Large-Cap ETF)

Tracks the FTSE China A50 Index, covering the top 50 Chinese A-share companies by market cap, similar to the “0050” in China. The index mainly consists of financial and consumer sectors, offering stability but lacking technological growth momentum.

7. KWEB (CSI China Internet ETF)

This ETF focuses on Chinese tech giants, holding about 50 companies with over 60% concentration in the top 10, including Alibaba (9988.HK), Tencent, Meituan, JD.com, Pinduoduo, etc. It is a must-have for investors optimistic about China’s tech prospects.

8. Hang Seng China 50 Index

Represents the top 50 Chinese mainland companies listed in Hong Kong, including more tech firms than FXI, better reflecting the new growth drivers of China’s economy.

9. Hong Kong 50 Index

Reflects the local economic situation in Hong Kong, suitable for investors optimistic about Hong Kong market development.

Comparison of Three Main Channels for Mainland-Hong Kong Stock Investment

Taiwan Broker-Dealer Proxy Trading

Advantages: Can be done in Taiwan, supports TWD currency exchange, convenient operation.

Disadvantages: High fees (starting from 0.3%~1%), quote delays of about 15 minutes, trading items limited by Taiwan’s financial regulator.

Suitable for: Investors with ample funds who do not mind higher costs.

Overseas Brokers

Advantages: Low transaction fees, rich trading tools, real-time quotes.

Disadvantages: Cross-border fund transfer required (time-consuming and costly), must trade in local currency (A-shares in RMB, Hong Kong stocks in HKD, US stocks in USD).

Suitable for: Experienced investors willing to handle the process and seeking low costs.

Contracts for Difference (CFD)

Advantages: Lowest fees, most diverse trading options, long and short positions, flexible leverage.

Disadvantages: No actual stock ownership, cannot participate in shareholder meetings; leverage risks must be carefully managed.

Suitable for: Short- to medium-term traders seeking flexibility and low costs.

Quick Reference for Key Trading Rules

A-shares Investment Restrictions:

• RMB currency exchange quota limit (Taiwan daily limit: 20,000 RMB)
• Usually purchased via Taiwan brokers through “Shanghai-Hong Kong Connect” or “Shenzhen-Hong Kong Connect”
• Minimum trading unit: 1 lot = 100 shares
• Trading hours: 9:30–12:00, 13:00–16:00
• Price limit: ±10%

Hong Kong Stocks:

• No currency exchange quota, supports HKD, TWD, or USD trading
• Minimum trading unit: 1 lot, but number of shares varies (100 or 1000 shares)
• No price limit
• Trading hours same as A-shares

US Stocks:

• No currency exchange quota, traded in USD
• Minimum trading unit: 1 share (small trades may incur low minimum fees, usually $10–$40)
• No price limit
• Continuous trading hours: Summer (9:30 PM–4:00 AM next day), Winter (10:30 PM–5:00 AM next day)

Best Timing for Mainland-Hong Kong Stock Investment

With frequent favorable policies, ample liquidity, and renewed overseas capital inflows, a clear signal emerges: the investment window for Mainland-Hong Kong stocks is opening. Compared to conservative A-share investors, capturing the growth of Chinese Concept Stocks and Hong Kong stocks offers greater opportunities to benefit from this wave.

Choosing suitable investment channels, doing thorough research, diversifying holdings of leading stocks and index ETFs, are the right strategies for steady participation in the Mainland-Hong Kong stock market.