Structured products: What are Red Chips and H-shares?

Red Chips are firms incorporated in Hong Kong and listed on the Hong Kong Stock Exchange. Red Chips are substantially owned, either directly or indirectly, by the Chinese government, and have the majority of their business interests located in mainland China.

H-shares are companies actually incorporated in China and traded on the Hong Kong Stock Exchange. They are quoted in Hong Kong dollars.

You may also hear about A-shares and B-shares when researching Chinese equity investments. A-shares are restricted to local investors, or certain qualified institutional investors, and are denominated in renminbi. B-shares are listed on either the Shanghai Stock Exchange (where they are quoted in US dollars) or the Shenzhen Stock Exchange (where they are quoted in Hong Kong dollars). B-shares represent the smallest class of Chinese shares, but can be traded by foreigners and those local investors qualified to hold substantial foreign currency assets.