Red Chip

A term that refers to a company incorporated in Mainland China that is also listed and traded on the Hong Kong Stock Exchange. They are called red chips because China used to be called “Red China”. They are also called H-shares.

Most red chips also issue stock that trades on a mainland Chinese stock exchange. Due to speculative demand many mainland Chinese stocks trade at high premiums to their Hong Kong counterparts. A rather striking case of investor irrationality.