Online trading

[tianjinpete]

沪市成交首超2000亿 -- The Shanghai stock market passes 200 bln (yuan)

With dramatic headlines like today's almost a routine occurrence, it seems that despite the volatility it's a good time to test the waters ...

Has anyone had experience as a foreigner in China opening a brokerage account, and particularly with trading online? ...

[gougou]

Are you aware that as a foreigner you are restricted to the B-Shares? It might be a better idea to invest in HK-listed shares (or even in Chinese shares in the US), you'll profit from more realistic valuations and stricter accounting requirements.

[tianjinpete]

Yes, thank you, I should have mentioned that restriction ... There are ways around it ... I have little interest in the B-shares ...

[cdn_in_bj]

I haven't but have been thinking about it lately. I would be interested in your findings...

I truly believe what we are seeing right now is a huge bubble on the same scale as the last tech boom, but it seems that with everyone around me and their grandmother buying stocks I am tempted to get in on the action too. Also with the influence/controls from a certain somewhere, I would think we are 'safe' from a collapse in the short term. In fact I see certain advantages to it vs. real estate.

[mr.stinky]

so if you open a domestic brokerage account, and make a zillion yuan, how do you go

about converting your gains to dollars or euros when you eventually decide to leave?

elsewise, open a brokerage account in your home country. you can buy mutual funds

specifically targeting asia, or single countries. then you have the exchange traded

funds, index funds, ADR's, etc.

online trading is no problem.

[tianjinpete]

Any earnings will stay in China -- there is a student who cannot afford to finish her degree ...

Can you help me with the online part? Do you recommend EverBright, China Merchant's, Shenyin & Wanguo, CITIC, none of the above?

[cdn_in_bj]

Well that's assuming one wishes to convert their money and take it back to their home country. There are good reasons why this may not always be the case.

Also, if you really want to convert your RMB, there are ways to do that.

[gato]

There are also some mutual funds available in the US that invests in A shares. But remember how the Chinese stock market performed from 1999 to 2005. Don't necessarily count on the government to help.

http://seekingalpha.com/by/symbol/caf

http://finance.yahoo.com/q/bc?s=CAF&t=1y

[mr.stinky]

for my part, i use a fidelity (non-paid endorsement) brokerage account, which i've had

for about 15 years. they offer a whole slew of no-transaction fee funds, including many

from other companies as well as their own house funds. they've got online trading,

online reps, a toll-free number to call the states, and they provide free wire services.

haven't considered the chinese brokerages yet, at this point no real reason to do so.

[tianjinpete]

Many thanks to all for the replies ... I'll post progress along the way ...

[tianjinpete]

From the Apr. 27th edition of The Economist:

WOULD-BE share punters, keen for a piece of China's booming stockmarket, are queuing to open accounts at a Beijing branch of China Merchants Securities. A busy manager, handing out application forms, says he is taking on 100 new clients a day, perhaps five times as many as a year ago. Bunches of small investors, ranging from students to pensioners, crowd around computer terminals to carry out their trades, keeping an eye on the prices as they flicker across big electronic screens. China's biggest-ever stockmarket boom may be turning into a bubble—and the country's leaders are getting worried.

If the bubble were to pop, it could have a bigger impact on social stability than any previous downturn in the stockmarket's 16-year history. There are now more than 91m accounts held by individuals at brokers or in mutual funds. Estimates for the number of investors vary widely. At the height of the last market boom, in 2001, there were 60m accounts but perhaps fewer than 10m investors. There are certainly many millions more now. New accounts at brokers are being opened at a rate of more than 200,000 a day, touching a high of more than 310,000 on April 24th. The total so far this year is more than 8m, which is around ten times as many as in the whole of 2005, when the market began to emerge from a four-year slump.

[cdn_in_bj]

Thanks for the article excerpt, Tianjinpete.

I was told yesterday that more new investment accounts are opened each day than in all of last year, however no one could provide me with the source of this "statistic". Judging from the article you posted, and assuming the rate keeps up, then this year there will be nearly 30 times the number of new accounts compared to 2005. Which is a lot more realistic than the number i was told, but no less eye-opening.

I think a large number of these accounts are being opened by individuals who could be categorized as non-traditional investors. These individuals, seeing what has happened with housing prices, and perhaps being no longer able to afford said houses themselves, have shifted their attentions to the stock markets in hopes that they will make their fortunes there. Yes, you could argue that these types of investors won't be investing very large amounts of money individually - on the low end, maybe only a few thousand RMB - but when you multiply this modest amount by MILLIONS, that adds up to a lot of new money coming onto the markets.

Anyways, it will be interesting to see which crashes first, real estate or the markets, and the resulting effects on the domestic and global economy.

[tianjinpete]

Yep, and it suggests that being in the business of opening accounts is safer and more lucrative than opening an account ...

[mr.stinky]

one of my language exchange partners (a computer science teacher at a local college)

has just opened her account. she's currently in two stocks, which she claims the

brokerage lets her buy with only a few percent down-payment. when it goes up enough,

she plans to sell and jump to another stock which she knows is going to rise.

strangely, when i asked her what happens if the stock tanks, she says it's no problem,

somehow the brokerage just writes it off. i find this hard to believe. when i explained to

her how it works with my brokerage, she just said 'but this is china.'

wow, if that's for real, i wanna get in, too. sure beats margin trading in the states.

[gato]

I heard a secretary where I work just quit to become a day trader. Sign of a bubble perhaps.

[cdn_in_bj]

Here's the link to the article quoted by Tianjinpete, the rest of the article is a very interesting read: http://www.economist.com/world/asia/displaystory.cfm?story_id=9084756

[gato]

See this report on China's stock market:

http://www.chathamhouse.org.uk/pdf/research/asia/ChinasstockmarketFinalPDF.pdf

CHINA’S STOCK MARKET:

eight myths and some reasons to be optimistic

THE CHINA PROJECT

THE ROYAL INSTITUTE OF INTERNATIONAL AFFAIRS

[tianjinpete]

Today's local paper ran this headline: 切勿拿身家性命冒险投资, a clear warning to ordinary folks not to "bet the ranch" on "risky investments" ... But the temptation is in the double and triple digit annualized growth in the SSE and other Chinese composites ... On top of that, if mr. stinky's friend is able to do what she says she does, it looks like some brokerage firms allow leveraged buys and write off customer losses ... Right now, I guess that works, apparently there is not much occasion to have to write anything off ... There should be a Richter scale, though, for measuring corrections in this market ...

[gato]

This used to be a practice among Japanese brokerage houses for favored customers. I doubt such promises, if they have been made, will be kept if there are serious losses.

http://query.nytimes.com/gst/fullpage.html?res=9D0CE6DE1030F930A15755C0A967958260

AP

Published: June 23, 1991

Japan's new stock scandal widened today with reports that two more brokerages had paid big clients compensation for investments that lost money.

The Kyodo News Service quoted Finance Ministry officials, who were not identified, as saying that the Daiwa Securities Company and the Yamaichi Securities Company paid more than $72 million to some large customers to cover stock losses.

[cdn_in_bj]

I just saw an article about the stock market in a Beijing newspaper today, the subheading was "400,000 new accounts being opened a day"...