Investing in Emerging Equity Markets: The Case of Chinese ADRs versus B Shares

Nancy Ursel (University of Windsor)
Xiaohua Lin (Ryerson University)
Jessica Li (GE Infrastructure)

Multinational Business Review

ISSN: 1525-383X

Publication date: 17 June 2006

Abstract

Chinese companies have recently started listing ADRs in North American stock exchanges and thus offered an alternative venue for Western investors whose access to the Chinese market has largely been limited to the illiquid B shares. Are ADRs a good substitute for investing in Chinese B Shares? We examine characteristics of return distributions for indices of Chinese shares and an index of Chinese ADRs. We also compare efficient frontiers for portfolios including Chinese shares and Chinese ADRs and compute possible portfolio allocations. We find that investing in Chinese ADRs does not provide a risk/return tradeoff similar to direct investment in Chinese stock exchanges.

Keywords

Citation

Ursel, N., Lin, X. and Li, J. (2006), "Investing in Emerging Equity Markets: The Case of Chinese ADRs versus B Shares", Multinational Business Review, Vol. 14 No. 2, pp. 83-98. https://doi.org/10.1108/1525383X200600010

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Publisher

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Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited

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