China market terminology explained

China equity market share classes

Chinese companies that are incorporated and listed in the People's Republic of China (PRC) generally issue A-, Band H-share classes. Depending on where they are listed, these Renminbi (RMB)-denominated shares may trade in different currencies.

Chinese companies that are incorporated and listed outside of the PRC may be referred to as Red chips, P chips, N-shares or ADRs, depending on their revenue sources and listing location.

Share class

Share class

Country of incorporation

Country of incorporation

Country of Listing

Country of Listing

Currency

Currency

Exchanges

Exchanges

Share class

A-shares

Country of incorporation

China

Country of Listing

China

Currency

RMB

Exchanges

Shenzhen Stock Exchange
Shanghai Stock Exchange

Share class

B-shares

Country of incorporation

China

Country of Listing

China

Currency

USD or HKD

Exchanges

Shenzhen Stock Exchange
Shanghai Stock Exchange

Share class

H-shares

Country of incorporation

China

Country of Listing

Hong Kong

Currency

HKD

Exchanges

Hong Kong Stock Exchange

Share class

N-shares

Country of incorporation

Non-China

Country of Listing

USA

Currency

USD

Exchanges

New York Stock Exchange
NASDAQ Exchange
NYSE American

Share class

Red chips

Country of incorporation

Non-China

Country of Listing

Hong Kong

Currency

HKD

Exchanges

Hong Kong Stock Exchange

Share class

P chips

Country of incorporation

Non-China

Country of Listing

Hong Kong

Currency

HKD

Exchanges

Hong Kong Stock Exchange

Share class

ADRs

Country of incorporation

Non-China

Country of Listing

USA

Currency

USD

Exchanges

New York Stock Exchange
NASDAQ Exchange
NYSE American

A-shares

A-shares refer to shares issued by Chinese companies incorporated in China, listed in the domestic stock market and open to foreign investors via the Qualified Foreign Institutional Investor (QFII), RMB Qualified Foreign Institutional Investor (RQFII), or the Stock Connect programs.

B-shares

B-shares refer to shares issued by Chinese companies incorporated in China, listed in the domestic stock market and open to foreign investors. They trade in USD on the Shanghai Stock Exchange and in HKD on the Shenzhen Stock Exchange.

H-shares

H-shares refer to the shares issued by Chinese companies incorporated in China and are traded in Hong Kong and other foreign exchanges. Similar to other securities listed on the Hong Kong Stock Exchange, H-shares trade in HKD and do not have any restrictions on who can trade them.

N-share

N-shares refer to shares of Chinese companies incorporated outside the mainland and are listed on the New York Stock Exchange, the NASDAQ Exchange or the NYSE American. A majority of its revenue or assets must be derived from Mainland China. ADRs of H-shares and Red chips are also sometimes called N-shares.

Red chips

Red chips refer to shares of Chinese companies incorporated outside the mainland (mostly in Hong Kong) that trade on the Hong Kong Stock Exchange, and are usually controlled by or affiliated with the Chinese government.

P chips

P chips refer to shares of Chinese companies incorporated outside the mainland (mostly in Hong Kong) that trade on the Hong Kong Stock Exchange, and are owned by private sectors in China.

ADRs

American Depositary Receipts (ADRs) refer to (Chinese) companies that are registered outside the United States and are traded on American Stock Exchanges.


Channels to access the China equity markets

Channels

Channels

QFII

QFII

RQFII

RQFII

Stock connect

Stock connect

Channels

Description

QFII

Allows Qualified Foreign Institutional Investors toaccess onshore markets

RQFII

Allows Renminbi Qualified Foreign Institutional Investors to access onshore securities and mutual funds in RMB

Stock connect

Allows mutual market accessfor investors on Shanghai/Shenzhen and Hong Kong stock markets

Channels

Currency

QFII

USD and other foreign currencies

RQFII

RMB

Stock connect

RMB

Channels

Eligible investors

QFII

Qualified institutional investors outside of China

RQFII

Qualified institutional investors outside of China

Stock connect

International and mainland Chinese investors

Channels

Quota

QFII

No daily quota requirement

Overall quota is subject to the rules set by State Administration of Foreign Exchange (SAFE)

RQFII

No daily quota requirement

Overall quota is subject to the rules set by State Administration of Foreign Exchange (SAFE)

Stock connect

Daily trading quota of RMB 13bn for each Shanghai and Shenzhen Connect

Channels

Eligible products

QFII

China onshore RMB-denominated products approved by CSRC

RQFII

China onshore RMB-denominated products approved by CSRC

Stock connect

Selected A- and H-shares


China fixed income definitions

CGB

China Government Bonds (CGB) are issued by the Chinese central government. The annual key tenors of the CGB issuance plan are formulated by the Ministry of Finance, subject to the limits approved by the National People's Congress.

CNY Bonds

CNY (or RMB) bonds issued in the onshore market (China Interbank Bond Market or Shenzhen/Shanghai Stock Exchange) by Chinese enterprises.

Corporate Bonds

Corporate bonds issued by non-financial corporations.

Dim Sum Bonds

RMB bonds issued offshore in Hong Kong by Chinese and foreign companies.

Enterprise Bonds

Bonds that are mainly issued by SOEs.

Financial Institution Bonds (FIBs)

Financial Institution Bonds are issued by financial institutions other than the three policy banks. 

LGB

Local Government Bonds (LGB) are issued by local governments and are relatively new in China.

NCD

Negotiable Certificates of Deposit (NCD) are short-term funding instruments that are issued by commercial banks. The tenors of NCDs have been limited by the PBoC to less than a year, with NCD funding included as a part of banks' inter-bank liability.

Panda Bonds

RMB bonds issued in the onshore market by foreign companies.

Policy Financial Bank Bonds (PFB)

Policy financial bonds are issued by the three policy banks – China Development Bank, Agricultural Development Bank of China, and Export-Import Bank of China.

USD China Bonds

USD bonds issued in the the offshore market by Chinese enterprises.


Channels to access the China bond markets

Channels

Channels

QFII

QFII

RQFII

RQFII

Stock connect

Stock connect

Channels

Description

QFII

China Interbank Bond Market provides direct access for public and private-sector investors to onshore bonds

RQFII

Allows investors to access the onshore bond market via Hong Kong

Stock connect

Provides direct access for Foreign Institutional Investors to access stock markets as well as CNY bond markets

Channels

Quota

QFII

No limit on quota, holding period or fund transactions

RQFII

No limit on quota, holding period or fund transactions

Stock connect

Approval required from SAFE for higher quotas

As of 12 June 2018, holding periods (QFII and RQFII) and monthly repatriation cap (QFII) were removed

Channels

Regulatory approval

QFII

Requires registrationwith the PBoC

RQFII

Requires registration with PBOC, onshore custody/ settlement agencies and Hong Kong CMU

Stock connect

Requires prior license and quota approval

Channels

Eligible products

QFII

Cash bonds and onshore rates derivatives (e.g. IRS, forward rate agreements, bond forwards)

RQFII

Cash bonds only

Stock connect

Cash bonds and onshore FX derivatives (for hedging)

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