Chinese equities have been a major focus for investors in recent months, with catalysts ranging from DeepSeek’s artificial intelligence (AI) advancements to tariffs and trade negotiations. However, the performance of Chinese equities has varied significantly depending on the particular equity market in question. Unlike many other global equity markets, China’s stock market is divided into distinct segments, each with unique characteristics and investor access. Understanding these differences is crucial to assessing how Chinese equities have responded to recent events and what is in store for them and emerging market equities more broadly moving forward.

Understanding the Different Chinese Equity Markets

A-shares represent publicly listed mainland Chinese companies that trade on domestic exchanges such as the Shanghai and Shenzhen Stock Exchanges. These shares are denominated in Chinese Yuan (CNY) and are less accessible to foreign investors due to regulatory restrictions. For average U.S. investors, exposure to A-shares is typically limited to mutual funds or select American Depository Receipts (ADRs). In contrast, H-shares are shares of mainland Chinese companies listed on the Hong Kong Stock Exchange. While these shares are issued under Chinese law, they must meet Hong Kong’s listing requirements and are denominated in Hong Kong Dollars (HKD). Unlike Ashares, H-shares are freely tradable by foreign investors, making them the preferred avenue for international market participants seeking exposure to Chinese equities. There is also a B-share market, but it is much less relevant in the broader investment landscape. The key distinction between A-shares and H-shares lies in their investor base — Ashares primarily reflect domestic sentiment, while H-shares serve as a gauge of foreign interest in Chinese stocks.