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Singapore Investors Can Invest In These Great Companies But…

Credit: Simone Brunozzi

Have you ever heard of Baidu.com? As the largest internet search company in China, Baidu, which is listed on the NASDAQ exchange in the U.S., has seen its shares gain a stunning 1,563% over the decade ended 22 May 2015.

That return hasn’t come about in a vacuum. From 2004 to 2014, Baidu has seen its revenue balloon from RMB118 million to RMB49 billion; the search giant’s earnings meanwhile, had also rocketed from RMB12 million to RMB13 billion over the same time frame.

What’s interesting here is that Baidu’s growth also does not seem to have slowed much: In the first-quarter of 2015, Baidu’s revenue had surged by a mighty 34% when pitted against the same quarter a year ago.

At this point, you might be wondering: Why am I going on and on about a firm listed in the U.S. when The Motley Fool Singapore is an investing resource that’s catered for Singapore’s stock market? That’s because Singapore investors can actually invest in Baidu within Singapore’s stock market along with 18 other NASDAQ-listed Chinese firms. And, this has been the case since 2010.

Unfortunately, what works in theory – that we can invest in these Chinese firms directly in Singapore – doesn’t seem to fly at all in reality.

The 19 companies in question, which include some of China’s largest firms like Petrochina and China Mobile, have their American Depository Receipts (ADRs) listed in Singapore. This came about thanks to the combined efforts of stock exchange operators Singapore Exchange and NASDAQ OMX in bringing these firms here.

But, there now seems to be a lack of effort in promoting this investing instrument amongst retail investors.

ADR trading volume

Source: Singapore Exchange

As you can see in the table above (click for larger image), all 19 ADRs have extremely low liquidity with no shares having changed hands as of 9:56am today. This is actually a common occurrence in nearly every day.

Foolish Summary

So, despite us investors in Singapore having access (in theory) to some of China’s largest and fastest-growing companies, the reality of the situation is that we’re not able to invest in them due to the weak (practically non-existent) liquidity.

Hopefully, there can be an improvement in the situation in the future so that we local investors can have the ability to invest in these Chinese firms both in theory and in practice.

For more investing analyses and important updates about the share market, check out the Motley Fool's weekly investing newsletter Take Stock Singapore. This free newsletter can teach you how to grow your wealth in the years ahead, so do take a look here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.