An increasing number of Chinese investors are putting their money in US stocks because of the strong performance of the US stock markets, the underperformance of the Chinese exchanges and relaxed rules on investing outside of China.
Liu Yihang is a financial adviser who has worked in the Flushing area of the New York borough of Queens for seven years, home of the city's second-largest Chinatown. He said more and more Chinese investors are disappointed by China's stock market and are shifting their attention to US stocks.
"My clients almost doubled during the past year," said Liu. "Even though China hasn't opened the door for domestic individuals to directly invest overseas."
Bi Caihong, a 55 year-old resident of Beijing who asked that her last name not be used, said that she started to invest in US stocks this year and that it is the best way to spend family savings.
"It's hard to invest in China, as the interest rate is low, real estate costs too much, and since the financial crisis hit China in 2008, the A-share market is unstable and so hard to predict," said Bi.
Snowball Finance, which runs two of China's largest social-media sites for investors buying US stocks, said the number of US stock traders in China is about 300,000, and more than 37 percent of A-share investors would like to open a US stock-trading account.
Boosted by strong economic performance, the US stock market has been one of the best performers in the world. The Dow Jones Industrial Average has increased by more than 13 percent so far this year. At the same time, China's stock market has maintained its sluggish trend, falling by more than 10 percent.
In May, China's State Council allowed individuals to make direct investments outside the country as part of economic reforms for this year.
Chinese investors who want to invest in US stocks must now trade through Hong Kong or open accounts directly through the websites of US stocks with a broker's help.
Liu said the process is inconvenient but doesn't stop Chinese brokers from trading on US stock exchanges.
"The number of Chinese traders increased so quickly that I am planning to hire an assistant just for this part of business," said Liu.
The surge of Chinese investors in US stock exchanges is not only bringing changes to individual financial advisers like Liu, but also has affected US retail brokerage firms, like Scottrade, which are offering 24-hour Chinese hotline services and websites translated into Chinese.
In July, Nasdaq OMX and the largest Chinese Internet portal Sina Corp agreed to provide real-time quotes of US stocks on Chinese websites to help Chinese investors make timely decisions.
Liu said more and more Chinese companies are listing their shares on US stock exchanges and that is another incentive for Chinese traders to try their luck in overseas markets. "Most of my clients prefer to buy US-listed Chinese firms' stocks," he said.
Yu Wei in San Francisco contributed to this story.
haidanhu12@chinadialyusa.com
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