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Last updated on July 24th, 2021

Xiaomi Corporation is a Chinese company that focuses on electronic products. Ranging from smartphones and laptops to even shoes, their products are built to cater to a global market.

If you are interested to invest in the company, you might be confused about the different ticker symbols. As with many companies, Xiaomi has listed their stock on several exchanges.

Each ticker symbol represents a stock in various markets. There will be two particular stocks that we will be discussing in this article: XIACY and 1810.

In particular, we will spell out their differences and explain which stock might be more suitable for you.

The difference between XIACY and 1810

Both stocks represent the same company, Xiaomi. However, XIACY is a US stock on the OTC market while 1810 is a Hong Kong stock on the HKEX. This also means they differ in their trading process, trading currency and minimum units to invest in.

Before going into their differences, it helps to understand more about where those ticker symbols came from.

Back in May 2018, Xiaomi filed to go public on the Hong Kong Exchange (HKEX). The stock was then labelled as 1810.

For XIACY, it has a different story.

When we buy XIACY shares, we are actually buying its American Depository Receipts (ADRs). ADRs appear when 1810 shares are traded through a depository bank in exchange. That process is initiated by a company or investors themselves.

In essence, these ADRs represent the underlying ordinary stock. They can then be traded either in a national exchange or the OTC market.

In XIACY’s case, it is sold on the OTC market. You can determine whether a stock is traded in the OTC market by Googling its stock code.

If the label shows ‘OTCMKTS‘, this means that the stock is listed on the OTC Markets.

With this general understanding about their ticker symbols, let’s now compare them.

They are listed in different markets

XIACY is listed on the OTC market whereas 1810 is listed on the HKEX.

For a reputable and well-known exchange like HKEX, stocks listed on it has its benefits.

For example, these exchanges often have strict listing requirements. This includes verifying the information that is submitted by applicants. As it is done by professional advisors from the exchange committee, they ensure that the companies’ information are accurate and reliable.

With these regulations in place, we have less to worry about in terms of the company’s authenticity.

On the contrary, stocks on the OTC market have fewer listing requirements. This has particularly drawn many small companies to apply for a listing there. These companies are often known to be speculative as they do not have a proven track record yet. As such, it has painted the OTC market in a bad light.

In addition, the OTC market has attracted investors who are seeking speculative investments. This consequently causes massive buying and selling on the stocks’ shares. As a result, OTC stocks are subjected to high volatility.

If you are intending to invest in an OTC stock, it helps to be aware about whether you are able to stomach the huge swings in the stock prices.

Different trading process

The process of trading on the OTC market is different compared to a standard exchange. On the outside, you can buy and sell both types of shares through the broker’s platform after setting up a brokerage account. Internally though, they are carried out differently.

When it comes to stocks listed on a standard market exchange, the shares are typically traded through an automated software system. This has important consequences:

• price quotations are accurately recorded
• trades are effected instantly

In contrast, trades in the OTC market are negotiated via the telephone. The manual procedures inevitably results in unreliable information and execution delays.

If you are looking to trade on the OTC market, it is valuable to understand these shortcomings.

Different trading currency

Their trading currencies are different because the stocks are listed on exchanges based in different countries.

The trading currency of XIACY is in USD while that of 1810 is in HKD.

This is important depending on the currency of your stock account. As funds are exchanged from one currency to the next, the exchange rates can eat into your returns.

As such, it would be good to choose either XIACY or 1810 if it is in the same currency as your domestic currency.

As seen on Google, below are the prices and currencies recorded:

Minimum number of units to invest in

The minimum number of units to invest in can also affect you depending on the amount of capital you have.

XIACY shares can be bought one at a time.

However, for 1810 shares, they can only be bought at a minimum of 200 at a time!

If you calculate the cost of buying 200 shares of 1810 and convert it to USD, it comes up to about $695 USD!

This is unlike XIACY which lets you own Xiaomi’s stock at a much lower cost of around $17.4 USD.

If you have a small capital, it is much easier to buy XIACY shares.

Different trading hours

Their trading hours will differ because XIACY and 1810 are listed on exchanges in different countries.

Here are the trading hours for both listings:

The timings are taken with reference to Singapore Standard Time (GMT +8).

If you are someone who considers the trading hours for investing, this would be important for you.

Different commissions charged

Before you buy Xiaomi’s shares, it would be helpful to know the trading fees that you will incur. That way, you can factor them into your costs.

Here are some examples of the commissions that you’ll be charged when trading in different markets:

Both Tiger Brokers and moomoo (powered by FUTU SG) have rather low fees to trade in either the HKEX or US markets.

Type of holding

XIACY shares are ADRs whereas 1810 shares are the ordinary shares of Xiaomi.

ADRs are a form of equity security that was created specifically to simplify foreign investing for American investors.

Fidelity

To recognize ticker symbols that are actually ADRs, you can search for their stock code on Google.

ADRs are not a particular concern for investors. However, there is a much bigger concern for you.

Like many Chinese companies, Xiaomi uses the Variable Interest Entity (VIE) structure in both Hong Kong and the US.

A variable interest entity (VIE) refers to a legal business structure in which an investor has a controlling interest despite not having a majority of voting rights.

Investopedia

This poses a risk to investors as China may clamp down on the VIEs and nullify the shares!

While this possibility may be low, we still would not want to ignore it.

It is also important to note that as an investor in Xiaomi, you do not have an ownership in the company. Instead, you only have an ownership of the VIE.

As such, they do not have voting rights in the company.

Both stocks are fungible

Both XIACY and 1810 are considered fungible stocks.

Fungible investments can be bought and sold on multiple exchanges.

The Balance

When you have shares of XIACY, you can sell them as 1810. Inversely, when you have shares of 1810, you can sell them as XIACY.

This can come in handy when you are thinking of converting between them.

Converting between these two stocks

So, how do we convert these stocks?

The official conversion rate for these two ticker symbols is 1-to-5.

1 share of XIACY is equal to 5 shares of 1810.

First of all, you will need to find a broker that gives you access to the HKEX and the OTC market.

Next, you can follow the procedures according to the respective broker to convert them.

However, these conversions can be quite expensive.

For example, Interactive Brokers charge a number of fees to help you convert, like

Not only that, there are risks involved in these conversions, such as

• price fluctuations
• exchange rate fluctuations

As the costs of these fluctuations are paid by you, it is helpful to account for these losses into your decisions.

Verdict

After discussing the points above, let’s summarize them:

So which stock should you be choosing? Here are some points you can consider when making your decision:

#1 Type of market

The stock prices of XIACY would contain higher volatility compared to the 1810 stock. That would be hard to take in for investors who have low risk tolerance.

If you are an investor who prefers stable stock prices, 1810 might be a better choice.

#2 Trading process

XIACY stock is traded manually which can be inaccurate and error-prone.

In contrast, 1810 stock is traded electronically which do not have the same problems. Also, the trades are processed faster. As such, 1810 stock would be better for investors in general.

#3 Minimum units to invest

Investing in 200 shares at a time can be a huge commitment for investors. It can also pose an issue for those who have limited capital. Thus, this factor for buying 1810 stock can be a deterrent.

In the case of buying XIACY, you can buy 1 share at a time which is way more available for investors to own Xiaomi.

Conclusion

To conclude, both XIACY and 1810 are ticker symbols that represent Xiaomi Corporation. While you can invest in their stocks and take a share in their profits, both of them are operating under the VIE structure. This results in you not having ownership and voting rights in the company.

In particular, there is a risk that China may crackdown on Xiaomi. The possibility is small, but it helps to take that into account when buying Xiaomi shares.

XIACY stock is in the OTC market rather than a standard market exchange. This negatively affects their:

• popularity
• volatility
• accuracy of trades

This might deter you as an investor. Nonetheless, you can buy them one share at a time. This is a plus point in contrast to 1810 stock where you can only buy 200 shares at a time.

For an investor who likes greater liquidity, stable volatility and reliable trades, buying 1810 shares would be a better choice. If you have shortage of funds, it may help to wait until you have saved up the required amount to invest.

However, if you wish to have Xiaomi in your stock portfolio despite shortage of funds, buying XIACY shares is a good way to go.

Besides buying them in the standard market exchange or the OTC market, you can opt to invest in ETFs that have Xiaomi as one of their holdings. Some examples include Hang Seng Tech ETF and Hang Seng Index ETF. Both of them have some weightage in Xiaomi which might interest you!

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Last updated on July 18th, 2021

Alibaba Group is a multinational technology company that focuses on e-commerce and retail. It is China’s largest e-commerce company. Some also say it is the Amazon of China.

As a public company, it is listed on several exchanges and markets. This provides easier access for investors to trade its shares.

Among the stock symbols, two of them are quite similar. They are represented as BABA and BABAF.

In this article, we shall delve into Alibaba and the differences between the two ticker symbols.

The difference between BABA and BABAF

Both of them represent Alibaba Group. However, BABA is an ADR on the NYSE, while BABAF is an ordinary share on the US OTC market. This also means they differ in their trading process and trading volume.

Before we explore their differences, it would be useful to understand a little bit more about where they came from.

Back in September 2014, Alibaba first listed itself on the New York Stock Exchange (NYSE). Its ticker symbol was chosen as BABA.

But wait, why did they choose to list it on NYSE rather than the Shanghai or Shenzhen Stock Exchange?

There are a few advantages that made Alibaba decide to list on the NYSE. They are

• control
• reputation
• range of motion

Following that, Alibaba applied to be listed on the over-the-counter (OTC) market as BABAF. An OTC stock can also be referred to as an unlisted stock.

However, why would a company choose to be listed on the OTC markets?

OTC markets are rather different from a standard market exchange. Companies often choose to list their stocks there for a number of reasons. They include:

• low regulations
• low listing fees

These benefits are in comparison to a standard exchange. For those reasons, they have attracted small companies to list their stocks there too.

Now that we understand where these ticker symbols come from, let’s talk about their differences.

They are traded in different markets

BABA and BABAF are traded in different markets, but what does that mean? What are the risks involved?

NYSE is known as a reputable US exchange. Being listed on it comes with its own regulations that must be followed. These regulations are upheld by the Security & Exchange Commission (SEC).

One example of a regulation is the consistent delivery of financial information to the public.

This information must be accurate, complete and of quality. If they are not followed, the company will run the risk of getting delisted.

That also means they will not be allowed to list on the US exchanges. As such, they would have to resort to listing their stocks on lower reputable markets.

In the event that happens to Alibaba, it would be devastating to their reputation. Subsequently, it would affect their ability to attract foreign investments in the future!

Low reputable markets include the OTC markets. They are known to contain smaller companies. Companies who were unable to meet the listing requirements of the standard US exchanges.

OTC markets do provide easier access for companies. However, they are not without their drawbacks. Some examples are low liquidity and high volatility.

As opposed to most OTC stocks, BABAF does not suffer from the drawbacks. Instead, its performance generally follows that of the BABA stock.

As such, it is not a huge concern for Alibaba to list their stock on the OTC market.

Different trading process

The process of trading on the OTC market is different compared to a standard exchange. On the outside, you can buy and sell the shares through a broker’s platform. Internally though, they are carried out differently.

When stocks are listed on a standard market exchange, the shares are traded through an automated software system. This has important consequences:

• price quotations are accurately recorded
• trades are effected instantly

In contrast, trades in the OTC market are negotiated via the telephone. The manual procedures inevitably results in unreliable information and execution delays.

If you are looking to trade on the OTC market, it is good to understand these shortcomings.

Type of holding

A BABA share is an American Depository Receipt (ADR), while a BABAF share is an ordinary share of Alibaba.

What is an ADR though?

ADRs are a form of equity security that was created specifically to simplify foreign investing for American investors.

Fidelity

To identify ticker symbols that are ADRs, you can do a quick Google search. Shares that are ADRs will have ‘ADR’ at the back of their name.

Ordinary shares do not pose any risks to the investor, but ADRs do.

These risks include exchange rate risk and inflation risk.

Moreover, Alibaba operates their business through a Variable Interest Entity (VIE) structure. This is due to China’s regulations to control foreign ownership. As a result, investors holding BABA or BABAF shares do not actually have an ownership in Alibaba. Rather, they own the VIE structure.

Because of this, investors also do not have voting rights in Alibaba.

Different trading volume

With regards to their 65-day average trading volume, BABA has 15.3 million worth. In contrast, BABAF has only 80.69 thousand.

BABA’s trading volume is much higher compared to BABAF!

Alibaba is a popular brand among US investors so it seems reasonable that it has high trading volume.

But, why does BABAF lack in comparison?

As mentioned, OTC stocks have a more complex method of trading. This often causes delays in the trading process, resulting in fewer trades being made. A low trading volume is not a bad thing per se, but it does prevent the investor from making higher returns.

At the same time, a high trading volume is not necessarily good either. While it does provide the possibility of high returns, there are risks involved.

High trading volume means that the stock prices can experience sharp jumps in the market. It takes an investor with a high risk tolerance to be able to withstand them.

As such, it is important to know what you are looking for as an investor.

Converting to ordinary shares

If you wish to reduce the risks of holding ADRs, it may be better to convert them to its ordinary shares.

BABA shares can be converted to its ordinary shares. However, BABAF cannot be converted in this case.

This is because BABA shares are actually ADRs.

If you want to own ordinary shares, buying BABAF is one option. However, another way you can go about is by converting your BABA stock to the stock that is listed on the HKEX: 9988.

9988 is a more ‘reputable’ stock with a higher trading volume compared to BABAF. As such, it may be a better choice to choose 9988 over BABAF!

Verdict

After doing a comparison between the two stocks, here is a summary:

Choosing between these two stocks may be difficult. Here are some points you can consider in your decision:

#1 Type of market

A NYSE listing establishes the company as reputable and credible among investors. This consequently attracts investors to put their money into buying BABA shares. As such, it raises the stock’s liquidity.

Conversely, BABAF in the OTC market would have difficulties making good profits for its investors. This is because the OTC markets in general have a lower reputation. As such, the stocks listed there are also unpopular.

Suppose you are an investor who wants to aim for higher returns, BABA shares would be more suitable.

#2 Trading process

The difference in their trading process can be a key factor for your decision.

An automated process is often more reliable. And it is faster in matching the volume of trades that are occurring today. On the contrary, manual processes can introduce errors and delays in trades.

If you seek reliability and accuracy in your trades, BABA would be a better stock to go for.

#3 Type of holding

Since BABA shares are ADRs, they can pose slightly more risks to the non-US investor. These risks can potentially reduce your profits!

As such, BABAF would be more appealing if you are a non-US investor.

#4 Trading volume

A high trading volume for a stock can create huge swings in their stock prices. This can be viewed differently depending on your goals and risk tolerance. While some see it as a way of getting great returns in the market, others foresee quick losses.

If you have a high risk tolerance, then BABA is a good choice for getting higher returns.

Conclusion

To sum up, both BABA and BABAF are ticker symbols that represent Alibaba Group. They are both traded in the US, though in different markets.

BABA is listed on the reputable New York Stock Exchange. Whereas BABAF is listed on the over-the-counter market. This creates several differences in the nature of their stock.

BABA, on one hand, is seen as more popular among investors. This is because they can generate good returns on their investment. Despite having high volatility, they are also not frown upon by investors. Instead, it is one of the factors that make it possible to earn high returns.

On the other hand, BABAF would be out of favor as it is traded on the less reputable OTC markets. Its trading process can encounter delays and may be unreliable. In addition, it has low volatility. As a result, investors would not have a good chance of getting high returns.

The decision to buy either stock is determined by your own goals and risk tolerance.

Assuming you have a high risk tolerance who wish to make high returns for yourself, then BABA would be the better option.

However, if an OTC stock with a manual trading process and low volatility does not deter you, then BABAF is more suitable. On top of that, you would be holding ordinary shares of Alibaba. This would pose no US currency risks to non-US investors!

Besides buying the stocks on the markets directly, you can opt to invest in ETFs that have Alibaba in their holdings. Some examples include Hang Seng Tech ETF and Hang Seng Index ETF. They have a rather high percentage dedicated to Alibaba’s shares!

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Last updated on July 20th, 2021

Tencent is one of three internet giants in China alongside Baidu and Alibaba.

As a public company, Tencent has since been listed in various markets and exchanges. Each has a different ticker symbol to represent it. It may be confusing when we first see them as some of them look quite similar!

Out of the many different symbols of Tencent, two of them, TCEHY and TCTZF, will be the focus of this article.

Here’s what you need to know about these 2 stocks.

The difference between TCEHY and TCTZF

Both TCEHY and TCTZF are listed on the US OTC market. However, TCEHY represents an ADR while TCTZF represents an ordinary share of the company. In addition, they differ in the currency of the dividends paid out and their trading volume.

Before we go into their differences, it may be worthwhile to understand the over-the-counter (OTC) markets in general.

Over-the-counter (OTC) refers to the process of how securities are traded via a broker-dealer as opposed to on a centralized exchange.

Investopedia

There are many types of OTC markets. The popular ones include:

• Best Market (OTCQX)
• Venture Market (OTCQB)
• Pink Open Market

Both TCEHY and TCTZF are listed on the Pink Open Market, also known as the Pink Sheets.

Historically, pink sheets got their name from the color of the paper on which quotes of share prices were published.

Investopedia

But wait, why do companies choose not to list their stocks on a major US exchange like Nasdaq instead?

The main reason is because they do not wish to or cannot meet the listing requirements. Some of the concerns include:

• the size of the company
• liquidity of the shares

Furthermore, the listing fees are rather high. This has discouraged companies from taking action. A known figure for a Nasdaq listing is said to be at a minimum of $150,000!

However for Tencent, they are big, popular and rich enough. It is still unknown why they chose to trade on the OTC markets.

Nonetheless, the OTC markets have their own set of pros and cons for companies. On one hand, their lack of regulation supports stronger growth in capital. This is due to easier access for US investors to trade. On the other hand, OTC stocks often have low liquidity and high volatility.

In Tencent’s case, its OTC stocks are not so much affected by the cons. This is because the company itself is well liked among investors. Furthermore, their overall stock performance seems to follow that of their Hong Kong stock, 0700.

Now, we have gained an understanding of the US OTC markets and what it entails for its stocks. Let’s start comparing between TCEHY and TCTZF!

Type of holding

Shares of TCEHY are American Depository Receipts (ADRs). Meanwhile, shares of TCTZF are ordinary shares of Tencent.

ADRs are a form of equity security that was created specifically to simplify foreign investing for American investors.

Fidelity

ADRs will expose more risks to the investor. This is due to exchange rate fluctuations between Hong Kong and the US. These fluctuations are in turn influenced by political events and inflation in the United States.

As such, they may not be attractive if you’re a non-US investor.

In this case, TCTZF might be a better choice if the intention is to steer clear of this currency risk.

You can identify an ADR by googling the stock code. You should see ‘ADR’ at the back of the stock name.

Whether you are holding one stock or the other, there is a dominant factor. Both of them are part of a Variable Interest Entity (VIE) structure. In other words, the investor is technically not having an ownership in the company, but rather the VIE.

A variable interest entity (VIE) refers to a legal business structure in which an investor has a controlling interest despite not having a majority of voting rights.

Investopedia

This also means that you will not have voting rights if you buy into either share.

In addition, there is a risk that China may clamp down on these VIEs and render the shares invalid. This is certainly undesirable!

While this possibility may be low, we still would not want to ignore it.

As such, if you are intending to invest in Tencent, it will be useful to take note of these risks.

Difference in currency for dividends

Tencent has been giving out dividends to its investors for more than 10 years. As investors of TCEHY or TCTZF, you will also be entitled to receive those dividends.

However, the currency of those dividends will differ, depending on the type of stock you own. For TCEHY, the dividends are in USD. For TCTZF, the dividends are in HKD.

The difference may seem odd, especially since both shares can be bought in USD.

If you are investing in Tencent for their dividends, you would want to receive the most accurate amount. However, with exchange rate fluctuations in play, this is not always possible.

This risk would affect you depending on the currency of your brokerage account. Assuming that you have a US stock account, owning TCEHY would not affect you as they are the same currency. However, if you own TCTZF, the process of exchanging currency on the platform may reduce your dividends.

This knowledge could be valuable to take note for a dividend investor!

Difference in trading volume

OTC stocks have a reputation for facing low trading volume. This is a result of the challenging process of trading.

In spite of that, Tencent is big and popular enough to be unconventional.

In terms of their 65-day average volume, TCEHY and TCTZF have 2.55 million and 19.52 thousand respectively.

TCEHY’s trading volume is way higher than TCTZF!

High trading volumes for a stock tend to be considered as high in liquidity. With higher liquidity also comes greater swings in the market. This could be a factor depending on your risk appetite.

If you have a low risk appetite, you might not be comfortable with those ups and downs in the stock price. However, if you have a high risk appetite, you would have no problems sitting on the stock while the market does its thing.

That being said, high liquidity may lead to high returns as well. As a result, TCEHY may be more attractive to you in this aspect.

Converting to ordinary shares

TCEHY shares can be converted to the ordinary shares whereas TCTZF shares cannot.

This is because TCEHY shares are actually ADRs.

If you want to reduce your risks of holding ADRs, you might be better to convert your TCEHY shares to 0700 shares.

Converting between TCEHY and 0700

Let’s say that you decide to convert between TCEHY and 0700.

This can be done with the following steps:

1. Find a broker that has access to Pink Sheets and the Hong Kong Exchange
2. Follow the procedures of the broker to convert them

The official conversion rate for these two ticker symbols is 1-to-1.

However, this conversion can be quite expensive.

For example, Interactive Brokers charge a number of fees to help you convert, like

Not only that, there are risks involved in these conversions, such as

• price fluctuations
• exchange rate fluctuations

As the costs of these fluctuations are paid by you, it is helpful to account for these losses when deciding to interconvert these shares.

Verdict

After doing a comparison of the two OTC stocks, let’s summarize them:

Choosing between these two stocks may be difficult. Here are some points you can consider in your decision:

#1 Type of holding

Investing in ADRs may put you through unnecessary currency risks. With the option of buying the same stock as an ordinary share instead, TCTZF seems to look more appealing.

However, if you are able to tolerate the risks, this factor may not be that important.

#2 Dividend currency

The currency of your dividends will affect the amount that you collect. Before deciding which stock to choose from, you may want to consider two things, including:

• the currency of your stock account
• your comfort level with the currency risks potentially eating into your returns

As such, your risk tolerance may help you to determine which stock would suit you more.

#3 Trading volume

The trading volume of a stock can influence your decision to own a particular stock.

Suppose you are an investor who has a high tolerance for risk, then owning TCEHY would be more in line with your goals. Otherwise, TCTZF would be more suitable for you.

In any case, both stocks do not actually have huge differences in their stock performance. It also helps to know that TCEHY is more popular with investors due to their higher liquidity.

#4 Fungibility

The ability to convert between the US stock and its Hong Kong stock can be something to consider depending on your needs.

While some investors like this factor because they want to profit from arbitrage, others simply prefer the flexibility on its own.

It would be beneficial to think about your needs. If you do not wish to convert between the US and Hong Kong shares, owning either one would not matter in this aspect.

Conclusion

To conclude, both TCEHY and TCTZF are ticker symbols that represent Tencent Holdings. They are both listed on the US OTC markets which serve to provide companies with easier access to US investors.

With regards to the dangers of an OTC stock, Tencent is largely not affected by them. This is because their stock performance follows that of its Hong Kong listing, the 0700 ticker symbol.

With China’s restrictions in place, its local companies have also sought a way to continue raising capital from the outside. This is done via the VIE structure. Yet, this also means that investors in TCEHY and TCTZF do not actually have an ownership in Tencent.

However, they are not too much of a worry for now as China has not indicated any disapproval of this structure.

Moreover, the decision to own either stock is determined by your risk tolerance. If you can withstand the exchange rate fluctuations and the huge swings in the market, then you might be comfortable with TCEHY.

For investors who have a lower risk tolerance, TCTZF would be a safer option.

In addition to buying the stocks on the OTC markets, you can choose to invest in ETFs that possess Tencent in their holdings. Notable examples are Hang Seng Tech ETF and Hang Seng Index ETF. They have a rather high percentage dedicated to Tencent’s shares!

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