China Stock Market Investment Guides and Best Technical Tips

Original Title: Investing in China Stock Market - Best Tips and Technical Guides

Article Summary: This post outlines some important China stock market investment guides as well as technical tips.

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Similar Article(s): Financial Market Reviews

Many investors in China go about their investments in an illogical way. They are given a tip from their broker on basis of some rumor or news. They invest impulsively and afterwards wonder why they bought the stock. Any such behavior is stupid and must be avoided.

Once you receive a tip on a stock, confirm the news on reputable China website. Big news, if any, will be on these sites; be it dividend payoffs, announcements, corporate decision to buy another company, earnings, fight between top management members or any other important news that may affect stock price performance. For more updated China stock market news, you may click on this blog subscription link to get our news free of charge easily.

Theoretically, investors should abide by following guides:-

(i) Business of Company. Do not buy equities of those Chinese businesses that you cannot understand. Once you have bought a stock, keep watch on quarterly results of that company and also keep watch on general trend in the same business sector for that stock.

(ii) Study Past Performance. Just like rest of the world, companies in China present particulars of their fiscal operation in their annual reports. Study their past performance and then invest only if you feel confident on it.

(iii) Know More About the Management. Always bear in mind that top management team and promoters of a company are key people who bring growth to a business. Invest in Chinese companies that have good management, experienced promoters, and where management or promoters hold more than 40% of total shares.

(iv) Current Stock Price Level. Stock price of each Chinese company fluctuates continuously on stock markets when investors buying and selling the shares. Cost at which a person is conformable to buy or sell a share of a company is the perceived value for that company share, taking into consideration the company present business and future business growth. More than that, investor sentiment plays a large role in pricing of equities. It is important that prior to buying a stock, you evaluate whether such share price at which it is available for purchase, is adequately valued i.e. it is not over-priced. Similarly, when you sell, you need to be sure that you are not selling dirt cheap. To help you evaluate this, you may apply a popular ratio called P/E ratio (Price/Earning ratio). P/E ratio can be calculated by the following simple formula:

P/E ratio = Market Share Price / Earning per share (EPS)*

*EPS = Profit After Tax (PAT)/ Total number of shares issued by a company {"/" represents divided by}

You may easily find information on PAT, EPS, and total number of shares issued by any company from its annual report. Once you have bought a stock after doing sufficient research, then you must not sell this stock in hurry if it falls just by 5-10%.

(v) Future Outlook of the Company. Even a company could have done well in the past, it is not necessary that it will carry on performing well in the time to come. Keep a close watch on sector trend and market trend. You may know this by reading: market analysis reports or financial target websites.

In all, our Chinese financial expert team recommends investors to be aware of useful technical tools for measuring stock performances before investing. Remark: see also Financial Disclaimers.

Original Tags: share price, share, stock, stock market, finance, market tips, market news, market price, invest, financial, China, Chinese

Note: This is our second post recovered from our previous Yahoo Blog.