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Published 2:30 p.m. UTC Oct. 10, 2024
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Why trust our investing experts
Compare the best Chinese stocks
| COMPANY | SECTOR | MARKET CAP | YTD PERFORMANCE | |||||
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Financial | $15.2 billion | 114% | |||||
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Consumer discretionary | $43.1 billion | 75% | |||||
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Real estate | $24.7 billion | 38% | |||||
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Consumer discretionary | $65.6 billion | 58% | |||||
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Consumer discretionary | $258.3 billion | 44% | |||||
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Industrials | $20.0 billion | 23% | |||||
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Consumer discretionary | $12.5 billion | 23% | |||||
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Consumer discretionary | $17.9 billion | 10% | |||||
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Final verdict
Buying Chinese stocks is always a risk. But investors can limit that risk by choosing stocks that are covered by professional analysts and listed on major U.S. exchanges. These stocks must meet U.S. accounting standards and withstand analyst scrutiny.
Many Chinese stocks have rallied recently, but the stocks mentioned above offer more than just a quick momentum trade. They may be excellent buying opportunities at attractive valuations for long-term investors.
How to buy Chinese stocks
There are several ways for U.S. investors to buy Chinese stocks.
ADRs. Investors can buy shares of American depository receipts, or ADRs. These ADRs are essentially receipts for foreign stocks. They’re issued by U.S. banks and traded on U.S. exchanges just like American stocks. Many foreign stocks that aren’t available as ADRs still trade in the U.S. over-the-counter market.
Direct foreign investments. Certain U.S. trading accounts also allow traders to buy and sell foreign stocks on local international exchanges.
ETFs and mutual funds. Investors can buy Chinese stocks indirectly by buying exchange-traded funds and mutual funds that hold them. These funds offer investors a diversified approach to Chinese stocks.
Pros and cons of buying Chinese stocks
There is certainly a lot to like about the long-term growth outlook for Chinese stocks. For one, the Chinese economy is the second largest in the world. As of 2023, there were over 1.4 billion Chinese citizens, a massive consumer market for companies to tap. The Chinese government also often bans or limits the reach of foreign companies attempting to operate in China. That isolationist approach helps protect domestic Chinese companies from international competition.
But the government has also demonstrated its willingness to stifle domestic growth to limit the power of Big Tech companies. High-growth companies risk becoming large enough that Chinese regulators will step in and quell their power.
Frequently asked questions (FAQs)
Yes. Investment income and capital gains from a company based internationally may be subject to taxation in both the U.S. and the overseas company. The U.S. tax code helps offset that potential double taxation by offering investors a foreign tax credit.
Yes, there are several risks associated with investing in Chinese stocks. International import and export tariffs, crackdowns by U.S. and Chinese regulators, complex ownership structures and lack of accounting transparency are just a handful of these risks.
It depends. Some Chinese stocks are positioned to be extremely lucrative long-term investments. But many risks surround Chinese stocks, making their long-term outlooks far from certain.
Yes, several popular mutual funds focus on China. Three examples are the Fidelity Advisor China Region Fund (FHKAX), BlackRock China A Opportunities Fund (CHKLX) and Matthews China Dividend Fund (MCDFX).
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
Wayne Duggan is a regular contributor for Forbes Advisor and U.S. News and World Report and has been a staff writer for Benzinga since 2014. He is an expert in the psychological challenges of investing and frequently reports on breaking market news and analyst commentary related to popular stocks. Some of his prior work includes contributing news and analysis to Seeking Alpha, InvestorPlace.com, Motley Fool, and the Lightspeed Active Trading blog. He’s the author of the book “Beating Wall Street With Common Sense,” which focuses on practical investing strategies to outperform the stock market. He resides in Biloxi, Mississippi
Farran Powell is the managing editor of investing, retirement and banking at USA TODAY Blueprint. Farran has more than 15 years of experience as a journalist with experience in both breaking and business news. Earlier in her career, she reported on the “Miracle on the Hudson” for the New York Daily News. That “Miracle on the Hudson” coverage won many breaking news awards. She furthered her business news coverage, reporting on housing markets and personal finance for many notable publishings, such as Dow Jones’ Mansion Global and TheStreet. Formerly, Farran was the assistant managing editor at U.S. News & World Report, where she oversaw multiple verticals including advisors, brokers and investing. She holds a BSc from the London School of Economics and an M.A. from the University of Texas at Austin.
Stephanie Steinberg has been a journalist for over a decade. She has served as a health and money editor at U.S. News and World Report, covering personal finance, financial advisors, credit cards, retirement, investing, health and wellness and more. She founded The Detroit Writing Room and New York Writing Room to offer writing coaching and workshops for entrepreneurs, professionals and writers of all experience levels. Her work has been published in The New York Times, USA TODAY, Boston Globe, CNN.com, Huffington Post, and Detroit publications.
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