F shares

American Depository Receipts

An American depository receipt (ADR) is a U.S. dollar-denominated negotiable security that represents ownership of a specified number of shares of a foreign stock that has been purchased by a U.S. financial institution through a custodian bank. ADRs are used by investors in the U.S. to purchase securities of foreign companies without having to deal directly with the foreign financial institution.

ADRs are traded on U.S. markets and their prices are quoted in U.S. dollars. Investors can buy and sell ADRs just as they would any other securities. The number of shares represented by an ADR depends on the specific company. Some foreign companies have a higher ratio of ADRs to shares than others.

ADRs are issued by banking institutions such as Citibank, Bank of New York and JP Morgan Chase. Every ADR must have a depositary bank, which is usually a major U.S. bank. The depositary bank acts as a custodian of the foreign securities, holds them in its custody, registers the ADR and services them. The depositary bank also maintains records and processes distributions and other actions for the securities.

The advantages of buying ADRs are that investors don’t have to deal with the foreign financial institution, can easily convert the ADRs to foreign currency when they sell, and U.S. rules, such as account segregation requirements, generally apply. For companies who want U.S. investors, issuing ADRs allows them to access the large and liquid U.S. markets, which could unlock additional value for their companies.

In some cases, it might be difficult for a foreign company to raise capital by offering its ADRs to retail investors in the U.S. If the company is not well known and does not have a large and liquid trading history, a U.S. broker-dealer may not be willing to offer it to its customers.

ADRs can also be used as a way for a foreign company to acquire a U.S. company. By issuing ADRs, the foreign company can purchase a large number of shares without paying cash or having to convert its foreign currency.

In conclusion, ADRs provide a convenient way for U.S. investors to purchase securities of foreign companies without having to deal directly with the foreign financial institution. By accessing the large and liquid U.S. markets, ADRs can provide additional value to foreign companies, and can also be used as a way for a foreign company to acquire a U.S. company.

H shares are shares of a mainland Chinese company that are listed on the Stock Exchange of Hong Kong. H shares were listed for the first time in 1993 and are the foreign currency-denominated shares of Chinese companies and their subsidiaries.

H shares are heavily influenced by the forces of supply and demand in the Hong Kong market, and the performance of the Chinese economy can have a significant impact on their price. H shares are subject to Chinascapital controls, exchange rate risks, and the companys own performance and risk factors. Many H shares are volatile, and investors should be aware of the associated risks.

H shares offer investors access to some of China’s large, blue-chip companies as well as smaller, entrepreneurial enterprises. Unfortunately, H shares are not as liquid or transparent as their counterparts listed on other international exchanges, and many companies adhereto limited disclosure and corporate governance standards.

Overall, H shares are an attractive investment option for investors seeking exposure to the Chinese market. Investing in H shares allows investors to tap into the solid growth and potentiallucrative opportunities in the booming Chinese economy.

Yet, investors must understand the associated risks and potential volatility of H shares before investing. By carefully selecting H shares that have established records of financial success, investors can capitalize on the potential rewards of expanding their portfolios intocompanies based in the world’s largest economy.