What information should you look for?
There are ample data and information on stock markets. From the considerable information and data, you need to choose those that can help you understand the market trends and make investment decision. You may need to know the following before investing in the Mainland stock markets.
The macro-economy and the financial market
Similar to how a fisherman observes the weather conditions before starting a day in the sea, you must keep abreast with the latest development of the macro-economy and financial market to invest in the Mainland stock market.
- GDP growth, inflation, fixed asset investment, manufacturing index, as well as purchase managers' index are all important data for understanding the Chinese economic performance.
- Capital flows can affect the stock market performance. The Shanghai Interbank Offered Rate, or SHIBOR in short, is the short term interest rates at which banks offer to lend to other banks in the Mainland. The trend of SHIBOR shows the interbank liquidity, as well as the sign of direction of the Central government's financial policy.
- Mainland A-shares are traded and settled in RMB. The fluctuations in the exchange rate of RMB can affect the investment return.
- The market would describe the impact of government policies on the financial market as a "policy-driven market". If you invest in the Mainland stock market, you must keep a close eye on the economic, financial and monetary policies of the Central government.
- Take a good look at the industry performance and trends before picking a stock. The industrial index series under the Shanghai Stock Exchange and the China Securities Index are the indicators that let you learn about the performance of various industries such as energy, industrial, consumption, pharmaceutical, financial, information and telecommunication.
- Industrial data, such as production capacity, production volume, sales volume, inventory, and product price, etc., can help you delve into the operation circumstances of a certain industry. Each sector has its own set of industrial data. You can find data and information about Mainland business sectors from official organisations such as the National Bureau of Statistics of China, or other industrial associations, etc.
- To invest in a listed company, you need to have adequate understanding about its business and financial situation. You also have to beware of its corporate activities. Announcements of Mainland listed companies, including their financial reports, are published on the websites of the SSE/SZSE, as well as the official designated newspapers and websites. These include the Shanghai Securities Journal, the Securities Times, the China Securities Journal, the Securities Daily, as well as www.cninfo.com.cn. The China Stock Markets Web page on the website of the HKEX also publishes the announcements issued by listed A-share companies related to Stock Connect from the previous day. Companies listed on the ChiNext Board are only required to publish certain corporate announcements in the company's website and officially designated websites.
- Similar to Hong Kong stocks, you can find the share prices as well as their price-to-earnings ratio and price-to-book ratio, etc. of the Mainland stocks from various financial websites, which can help you evaluate a stock.