How to invest in Xiaomi?
It's possible to invest in Xiaomi. However, investing in the publicly traded Chinese company is more challenging because its stock isn't listed on a U.S. stock exchange, such as the New York Stock Exchange (NYSE) or Nasdaq Stock Exchange.
The company listed its stock on the Hong Kong Stock Exchange following its 2018 IPO. So, you'd need a brokerage account capable of trading shares of companies listed on foreign exchanges or buying shares listed on the OTC markets exchange. Here's a list of the best brokers for international trading.
Opening a brokerage account is one of the first steps in learning how to invest in stocks. Another crucial step is to research the company. You'll need to thoroughly research the Chinese consumer technology company before you buy shares.
You must be comfortable with the additional risks of investing internationally, including foreign-exchange risk, potential oversight and corporate governance differences, and possible liquidity issues. You also must be comfortable investing in a company whose two major co-founders hold more than 70% of the voting power, which gives them the power to vote against an item that a majority of shareholders might approve.
Other factors to consider when researching a company include its profitability, balance sheet, and competitors. If you're unsure you want to invest directly in the company, you could gain passive exposure through a tech ETF focused on Chinese stocks.
Once you've opened and funded an internationally capable brokerage account and thoroughly researched the company, it's time to buy shares. Before you do, you'll need to determine how much you want to invest in the company.
A good rule of thumb is to have a diversified portfolio of at least 25 stocks with roughly equivalent allocations. For example, if you plan to invest $10,000 in building a diversified portfolio, you'd invest about $400 per stock, including Xiaomi.
Related investing topics
