Red Chip
A company based in Mainland China that is incorporated internationally and listed on the Hong Kong Stock Exchange. Red chip stocks are expected to maintain the filing and reporting requirements of the Hong Kong exchange, which makes them a main outlet for foreign investors who wish to participate in the rapid growth of the Chinese economy.
Red chips are also known as "H-shares", and may be issued in addition to A-shares in the same companies, although only Chinese citizens can invest in A-shares. Investopedia Says:
Thirty red chip stocks (a reference to the color of China's flag) make up the Hang Seng China-Affiliated Corporations Index, which appreciated rapidly in the 2002-2007 time frame. As a sign of the pent-up demand among mainland Chinese citizens for Chinese stocks, the A-shares they are permitted to invest in often have 30-50% premiums compared to H-shares and red chips for the exact same companies. Related Terms:
A-Shares
Brazil, Russia, India, and China - BRIC
China Concepts Stocks
China Securities Regulatory Commission - CSRC
Chinese Wall
H-Shares
Hang Seng Index - HSI
HKD
Shanghai Stock Exchange |