Yesterday, the China Securities Regulatory Commission (CSRC) announced its decision to confiscate all illegal gains from the domestic and overseas entities of Tiger Brokers, Futu, and Longbridge, and initiated a two-year rectification period.
During the rectification period:
- New deposits are prohibited.
- Buying is prohibited.
- Only selling stocks and withdrawing funds are allowed.
- Existing mainland users will be gradually cleared.
After the rectification period: All domestic apps, websites, and servers will be closed, and a full exit will be completed.
In the current environment, there are three compliant ways for ordinary people to invest in US stocks:
1. QDII Funds
The simplest way is to open Alipay.
Search for S&P 500 or Nasdaq 100.
The underlying logic is that domestic fund companies use the foreign exchange quotas approved by the state to invest overseas for you.
Advantages:
- You can buy with RMB without exchanging for USD, and it doesn't use your $50,000 annual offshore quota.
- Many products can be invested in with just 10 RMB, so there is almost no threshold. The annoying part is frequent purchase limits, sometimes 10, 50, or 100 RMB.
There are two solutions for this:
One is to diversify across multiple platforms. Don't just stick to one fund. If GF Securities is limited, switch to E Fund. If you've reached the limit on Alipay, go to Tiantian Fund to buy more. By investing in 3-4 funds simultaneously, you can buy several hundred RMB daily.
Another solution is to use a securities account (the one you use for A-shares). Search directly for S&P 500 ETF or Nasdaq ETF. Buying these on-exchange ETFs is the same as buying stocks. The advantage is a larger quota; sometimes buying 10,000 RMB at once is no problem. Also, management fees are about 50% cheaper than those on Alipay. However, on-exchange ETFs sometimes have premiums; check the premium rate before buying. If it exceeds 3%, it's recommended to wait.
2. Hong Kong Stock Connect
This has a higher threshold, requiring 500,000 RMB.
To be clear, the Stock Connect buys Hong Kong stocks, so you can't buy Apple, Google, or Nvidia. It covers about 300 of the largest market cap stocks on the HKEX. Not just Tencent, Alibaba, and Meituan, but everything from HKEX itself and AIA to China Mobile and CNOOC.
How does this relate to US stocks? Companies like Alibaba, JD.com, Baidu, and Bilibili have linked stock prices in Hong Kong and the US; only the stock codes are different. Buying Alibaba in HK is effectively holding Alibaba in the US. This path is very compliant, clean, and the money doesn't even leave the country—zero gray areas. However, the 500k threshold is high, and you can't buy leaders like Apple or Nvidia.
If you don't have 500,000 RMB, the following 'zero-start' path might suit you better.
3. Hong Kong Bank Account + Licensed Broker
You can refer to my previous step-by-step tutorial on opening a HK card: https://x.com/Pence0629/status/2046117847165026394
This path offers the most flexibility but requires you to personally visit Hong Kong to open a bank account (HSBC, BOC, or ZA Bank) and then use that account to open a licensed HK broker like Interactive Brokers or Phillip Securities. Although it takes time, once this path is open, you can invest in US, HK, and global markets freely, with much lower fees than domestic QDIIs.
Note the 'red line': the $50,000 annual foreign exchange quota cannot be used for trading US stocks according to regulations; it can be used for travel, study, etc. Therefore, you cannot remit funds directly from a mainland bank card to an offshore brokerage account. This path is suitable for two types of people: those with legal overseas income, or those willing to gradually accumulate funds in a HK account through compliant channels.
Summary
- If you want to invest a few hundred or thousand RMB monthly without hassle, buy QDII funds on Alipay; it takes 10 minutes.
- If you have an A-share account and want to buy more, purchase on-exchange ETFs.
- If you have 500,000 RMB and want to use your existing A-share account, opening Stock Connect to buy Tencent or Alibaba is fine.
- If you are willing to visit Hong Kong for a bank card to seek maximum freedom and have some legal overseas income, you can navigate the global markets.
These are the three main compliant paths for ordinary mainlanders to invest in US stocks. Follow me for more tutorials! 🤓
