What Is Red Chip?

The mainland Chinese shareholders are the controller of a Red chip which is incorporated and traded on the Hong Kong Stock Exchange. Hong Kong is the place from where the companies connected with red chip stock headquartered. Sometimes the executives from western countries managed these companies.

The red chip stock concept began in the early 1990’s. The ensuring growth began to provide benefits of red chip stocks when the Chinese economy and easing of interest rates starts to improve. Red chip is conglomerate- like in china, companies’ stocks holding various local properties or city government properties.

As Example: Shanhai Industrial, which is the red chip stock company from Shanghai, has holdings in more than 100 companies. Another red chip stock company named Guangdong Investment manages the commercial endeavour of the Provincial government of China which is one the wealthiest local government in china.

Hong Kongs’ filing and reporting requirements are expected to maintain by Red chip stocks, which makes them an important and main outlet for other investors who want to participate in the rapid growth of the Chinese economy. Only Chinese citizens have the authority to invest their money into A-share but still Red chips may be issued in addition to A-shares in the same company. The Hang Seng China -Affiliated Corporations Index which is made up by Thirty red chip stocks, which appreciated in the 2002-2007 rapidly in time frame. Chinese stocks are in demand among mainland Chinese citizens which is the sign of the pent-up demand. Because of these demands, they get permission to invest 30-50% premiums in A-shares compared to red chips to the exact same companies.

Red Chip stocks introduced one radio which is used for a radio news forum that provide information about general market and small-cap news and also interviews of CEO’s and executives of prominent small-cap companies. There are several miners who done well for Red chip investors. South American Silver is one of them. On June 28, 2010first brought to attention of investor at only $0.62 per share, then in the ensuing 10 months SAC surged more than 400%, in April it reaching a high of $3.20 per share. On July 14, 2012 Red chip starts coverage on better-for-you food manufacturer and marketer Inventure Foods. On May 9, 2012 SNAK reached a high of $6.67 per share, up 118%.

Investors who have built their position in these companies at the beginning of Redchip coverage get big profits over the long term. But how can one know about Tomorrow’s top performers. So to know about it, Red Chip has recently started coverage on cloud computing company Asure software which comes at a price of $15.9 and used to represent a potential upside of more than 290% from recent price.