Two alternative routes into the Chinese market

The Chinese stock market may be red hot, but it's also expensive and largely closed to foreign investors. Luckily, many shares are also listed on the Hong Kong (left) and Singapore stock markets. We pick some of the best.

It's been business as usual in China's domestic stockmarket over the past few days. A recovery of around 10% since the jitters of early June means it has almost doubled in 2007, and it is still on a p/e of 43. Fortunately, not all Chinese stocks are this expensive. The Chinese domestic market is largely closed to foreign investors, and "it is difficult for domestic money to get out of China", says Wilfred Sit of Mirae Asset Global Investment Management in Barron's. So there are "billions trapped in the market", pushing up prices. With the Shanghai market rocketing, mainland Chinese shares traded in both Shanghai and Hong Kong sell for vastly different prices in each market. The Shanghai-listed A-shares' of Bank of China command a 39% premium over the Hong Kong-listed H-Shares'.

Or take the case of three similar meat producers, say Chua Kong Ho and Daniel Hauck in the International Herald Tribune. The first goes for 146 times earnings on the mainland, another costs 26 times in Hong Kong and the third, People's Food Holdings, 11 times in Singapore. H-shares are on an average p/e of 20, while China-based firms listed in Singapore, known as S-chips (smaller and deemed somewhat lower in quality than H-shares) cost about 15 times earnings.

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