With the exception of Hong Kong, in China, securities are divided into Class A Shares and Class B Shares, with A Shares limited to domestic investors (excluding Hong Kong residents) and QFII only, while B Shares available to both domestic and foreign investors. Shanghai B-shares are traded in USD, while the B Shares on the Shenzhen Stock Exchange are traded in Hong Kong Dollar.

In 1990 the first batch of 8 A Shares were listed on The Shanghai Stock Exchange (SSE).  In 1992, the first B Share made debut on the stock market.  By the end of 2009, there were 860 A Shares and 54 B Shares in Shanghai Stock Exchange, while there were 818 A shares and 54 B shares in Shenzhen Stock Exchange. Though there had been 57 B-shares on Shanghai and 57 B-shares on Shenzhen stock exchanges, by May 31, 2010, there were 54 B Shares in Shanghai Stock Exchange and 54 B shares in Shenzhen Stock Exchange due to suspension or delisting of some shares. As at June 3, 2010, there were 869 and 980 A-shares on Shanghai Stock Exchange and Shenzhen Stock Exchange, respectively.

On December 31, 2009, total market capitalizations of A-shares in Shanghai and Shenzhen were RMB 18,830 billion (US$2,756 billion)and RMB 5,833 billion (US$ 854 billion), respectively.  In comparison, the market capitalizations of B-shares were much smaller, respectively at RMB 86 billion (US$ 12.59 billion) and RMB 96 billion (US$14.5 billion). For more details in B shares, please go to the following article: China Stocks B-Share in Details.

Unlike mainland China, there are no restrictions on foreign investors in trading Hong Kong stocks.  To cope with the development of the derivatives market such as index futures and index options, Hong Kong Stock Exchange classifies some securities into H Share and Red Chip.

Shares issued by a PRC (People’s Republic of China) issuer under PRC law and listed on the Stock Exchange of Hong Kong, the par value of which is denominated in Renminbi, and which are subscribed for and traded in Hong Kong dollars, are named H Shares.

A company is deemed to be China-controlled company (Red Chip), if (1) the company has at least 30% shareholding held in aggregate directly by Mainland China entities, and/or through companies which are controlled by Mainland China entities. Or (2) the company has below 30% but 20% or above shareholding held in aggregate directly by Mainland China entities, and/or through companies which are controlled by Mainland China entities and, there is a strong influential presence, on a judgmental basis, on the company’s board of directors. Mainland China entities include state-owned organizations and entities controlled by provincial or municipal authorities.

Red Chips are also traded in Hong Kong dollars.

Related articles on this website:

What is QFII in China Stock Markets?

China Stocks B Share in Details

China Shanghai B Share Trading System

List of China B Shares on Shanghai Stock Exchange

List of China B Shares on Shenzhen Stock Exchange

Shanghai Stock Exchange Composite Index (SSECI) Constituents

Hang Seng Index Constituents

H-Share Index:HSCEI Constituents

Hang Seng China-Affiliated Corporation Index (HSCCI) Constituents

List of Securities on H.K. Stock Exchange Main Board with Lot Sizes & Codes

List of H-Shares on Hong Kong Stock Exchange Main Board

List of Red Chips on Hong Kong Stock Exchange

China ADRs

China ADRs Traded in Both US & Hong Kong

Double/Triple Listings of A-shares, H-shares and ADRs