Question

Identify some challenges a Chinese investor may encounter in the US.

Are these challenges different from those facing a US investor?

Answer 1

Some Challenges are that Chinese investors face in the US. Higher transaction costs that the biggest problem for an investor to invest in the US market. Their transaction cost varies and greatly depended on the nation where you investing. US market taxes, brokerage commission cost, higher than that make the cause of increment in transaction cost.

There are frequently added additional charges on every payment. Political risk, the investment dependent on foreign governments and politics any subsequent corruption or any regulations changes

may fall the shares of the company and makes make a loss, for Chinese investors.

Currency volatility, it mostly affects retail investors when investing in a foreign market or US market there is a requirement to exchange Chinese domestic currency in the US currency at the current exchange rate. Uncertainty in exchange rate always a threat for Chinese investors in the US market, to simply hedge Chinese currency exposure and there some required to hedge currency future, options, and forward that can be used to minimize hedge risk but it is difficult to gain for Chinese investors in the US market.

Liquidity risks are another problem for Chinese investors in the US market because another risk is inherent in the foreign market, it is a type of risk which is not being able to sell your stokes immediately. And the certain time of period a given financial asset and security can't be traded quickly in the market without impacting the price. These types of risk Chinese investors face in the US market.

Yes, US investors also face the same problem in Chinese products in which the many world-famous companies originate.