Investing in Emerging Equity Markets: The Case of Chinese ADRs versus B Shares
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
Publisher
:Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited