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Where Can I Invest My Money as an Expat in China?

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How to Invest Money as an Expat in China?

In this article, you will learn how to invest in China as a foreigner.

Chinese equities come in the form of direct shares: "A shares" refers to a classification of common or preferred stock that typically has weakened voting rights or other benefits compared to Class B or Class C shares in China; "H Shares" are shares of Chinese mainland companies that are listed on the Hong Kong Stock Exchange or other foreign exchange. Although H-shares are regulated by Chinese law, they are denominated in Hong Kong dollars and are traded in the same way as other equities on the Hong Kong exchange.

"A" shares are traded on the Shenzhen and Shanghai exchanges and can only be bought by mainland Chinese citizens.

Foreigners are allowed to buy "H" shares and "red chips", which are private, or partially state-owned, companies incorporated on the mainland but listed on the Hong Kong stock exchange in Hong Kong Dollars. Big names include China Mobile, Bank of China and PetroChina. 

Average Expat Salary in China

The average China expat's nominal cash salary average is about $80,000 a year after tax, which works out to a little over RMB 40,000 per month. Their total package with housing, school & benefits make it up to $275,000 per year though, which means an expat in China has a high amount of liquid cash which it can use to invest wisely into bonds and equities. You can change these into Hong Kong Dollars and hope to open an online brokerage account in Hong Kong or you can convert into USD and buy Chinese ETFs and get exposure to Chinese tech companies and "A"shares, but hold in the world reserve currency of US Dollars.

Trump's Trade War with China

The US trade war with China will undoubtedly weaken the Yuan, making the need to hold US Dollars more prevalent. Investing part of your salary in US Dollars is a smart way to diversify your currency portfolio and protect your wealth in the event of a falling Yuan. It is also an idea to hold US Dollars for when travelling to other destinations. It is often easier to transfer US Dollars and convert them to other currencies at the best exchange rate, because it is the World Reserve currency and in high demand. You can even spend US Dollars in many countries such as Cambodia, Vietnam, the Bahamas, Turks & Caicos, BVI, Belize, Ecuador, Nicaragua and Zimbabwe.

The trade war with China started in earnest on July 6th, but you can see the US Dollar strengthening in the run up in the chart below.

usd yuan 1 year chart

How to Grow Your Money through Investments as an Expat in China

In order to diversify your currency to protect against currency fluctuations, it may be an idea to hold some money in US Dollars, the world reserve currency. The US Dollar makes up over 62% of the world's foreign exchange currencies, the EUR at 20% and Japanese Yen at less than 5%. The Yuan is below 1.5%. 

How to Invest in the Chinese Stock Market via USD ETFs

Where can you invest in China as a foreigner?

As an expat in China, you can invest in a roboadviser which is  a very low cost solution for buying & selling ETFs listed on the NY stock exchange. A roboadviser can automatically buy an sell ETFs on your behalf and rebalance the equity/bond ETF mix regularly, usually monthly. This will diversify your portfolio, adding protection from prolongued dowward markets with the ability to move to cash, bonds or gold.

The Money Pouch is a free automated stock trading app and its adventurous portfolio invests in some Chinese ETFs along with a mix of other low cost Exchange Traded Funds. For the risk averse, there is a conservative strategy and there is also a balanced strategy for investors in the middle.

You can download the free app on iTunes or Android. Just take a quick risk questionnaire and your free risk score will be delivered to your inbox. Then, if you wish to proceed, just fill out the application form. We can also take over management of anyone who already holds an Interactive Brokers Account.

Watch the video below. 

The easiest way to set up an account is to use an address from a country outside of China and transfer money in USD from an offshore account. Click on the home page above to download the free apps or just continue your application form in your browser on the website.

 



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