How to buy Chinese shares in the UK
Some of the world’s largest companies are listed in China. Find out how to take a position on Chinese shares in the UK and discover the different methods for doing so.
Choose how you want to buy Chinese stocks: investing or trading
You can trade Chinese shares that have US American Depositary Receipts (ADRs) with a CFD account.
ADRs are certificates that enable an offshore trader – in the US or UK for example – to take a position on Chinese shares that are not listed on US or UK exchanges, and without having to trade on Chinese exchanges.
Investing in Chinese shares
Investing means that you’ll be taking direct ownership of the shares, which will make you a company shareholder that is eligible to receive dividends and voting rights – if the company grants them. You’ll need to commit the full value of the position upfront, and your maximum risk is capped at this upfront cost.
Trading Chinese shares
Trading means that you’ll be taking a speculative position on Chinese shares without owning them directly. You’ll be using financial derivatives like spread bets and CFDs to go long if you think the company will rise in value or short if you think it will fall – something that you can’t do when investing directly.
Trading derivatives lets you open a position with leverage – which grants you full market exposure for only an initial deposit, known as margin.
Open an account
When you’ve decided whether you want to trade, you’ll need to open an account. The account you create will depend on how you’re taking a position.
If you’re speculating with derivatives, you’ll need a trading account. We offer both, and you’ll get access to the range of educational tools and courses at IG Academy for free when you create an account with us.
Complete a W8-BEN form
Any individual who wants to invest in shares that are listed on US exchanges will need to complete a W8-BEN form. This is true for any Chinese shares you want to take a position on from the UK and which are dual-listed on US exchanges.
A W8-BEN form is a requirement from the Inland Revenue Service (IRS), and it informs them that you are not a US citizen. As a result, we can secure a US tax reduction for you which could reduce the tax you pay on dividends for US-listed Chinese shares by 30%.
If you’re looking to trade US-listed Chinese shares, you won’t need a W8-BEN when you spread bet, but you will need to fill one out to open positions on US-listed Chinese stocks with CFDs.
Understand the charges
The costs and charges for buying Chinese shares in the UK will vary according to your broker. When you deal with us, you’ll receive access to Chinese shares that are dual-listed on US exchanges. These shares will benefit from our best share dealing commissions on US shares, which is $0 if you opened three or more positions on your share dealing account in the previous calendar month.
If you’re looking to trade on the price of Chinese shares with spread bets and CFDs, you’ll incur our usual spread betting and CFD charges. For spread bets, there is no commission to pay but you will pay a commission on CFD trades.
Additionally, spread bets are completely tax free, while CFDs can be used to offset profits against losses as a tax deduction.1
Choose the Chinese shares you want to buy
We offer a wide range of dual-listed Chinese shares to trade in the UK. With our clients, some of the most popular include Tencent, Ping An Insurance, Geely Automobile, MTR Corp and BYD Co. We have a stocks screener tool to help you select shares that you’d like to take a position on.
Buy the stocks and monitor your investment
When you’re ready to invest or trade Chinese stocks in the UK and you’ve selected the company you want to take a position on, you can buy the stocks. Once you’ve bought them, you’ll need to monitor the share price movements to ensure that it is moving in the way you expected.
When buying with CFDs, you’ll need the share price to increase in order to generate a profit. When going short with derivative products, you’ll need the price to fall to generate a profit.
Buying Chinese shares summed up
- You can buy Chinese shares from the UK, but first you’ll need to decide how to take a position
- To trade, you’ll need a trading account and you’ll be able to speculate on share prices rising or falling
- Our stock screener tool can help you to identify Chinese shares to buy in the UK
- Once you’ve bought your shares, you’ll need to monitor the position so you’re ready to take
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
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