China: The Elusive Hedge, by Andrew Batson

In existence since the early 1990s, China’s Class A shares are denominated in yuan — a currency that isn’t readily convertible — and have often been overshadowed by the bigger and more open stock market in Hong Kong. A combination of capital controls and heavy regulatory influence has made the $540 billion Class A share market perhaps the most isolated major-share market in the world, moving all but entirely to the beat of its own drummer.

China has offered big investors some access to the Class A share market, though the current group of qualified foreign institutional investors is permitted to invest a combined total of no more than $7.15 billion in domestic securities. As the government gradually relaxes those limits, foreign investors will play a bigger role in driving market movements.