The Hong Kong Stock Exchange is the fifth largest in the world in terms of market capitalization. What that means is that most investors would be eyeing to invest hugely in such a stock exchange to profit big time.
Come to think of it, this stock exchange carries stocks of some of the best-performing companies in the world.
It’s the world’s fifth-largest stock exchange for heaven’s sake.
Would you also not be interested in trading such stocks? You definitely would.
But what if you are so green in stocks trading, wouldn’t it just be so ideal to not trade after all? Exactly!
If you are wondering how you can start trading these highly coveted stocks in the Hong Kong Stock Exchange, then you are at the right place.
In today’s post, I will show you how to trade Hong Kong Stocks. Only be sure to read to the end to get everything.
Trading Hong Kong Stocks.
Before anything else, there is worth noting that Hong Kong is free to be capitalistic and to manage its own currencies, trade, and taxes.
It was just recently when the Shanghai-Hong Kong Stock Connect was launched. This allowed cross-border stock trading between china and Hong Kong through local firms.
Here are 2 ways individuals and firms can trade Hong Kong Stocks:
- Directly through American Depository Receipts (ADRs).
- Indirectly through Exchange-Traded Funds (ETFs).
American Depository Receipts (ADRs).
Are you in the United States?
If so, you can then access Hong Kong Stocks directly through American Depository Receipts (ADRs).
This is what you do.
Access a local securities exchange like the New York Stock Exchange (NYSE) or NASDAQ.
There, you will find some Hong Kong Stocks listed as American Depository Receipts (ADRs) such as:
- Sun Hung Kai Properties Limited (US OTC: SUHJY).
- AIA Group Limited (US OTC: AAGIY).
- Hong Kong Television Network Limited (US OTC: HKTVY).
You can also access Hong Kong Stocks listed as American Depository Receipts from the various over the counter exchanges in the United States.
Through American Depository Receipts, investors get to own foreign stocks such as Hong Kong Stocks without much strain.
This is because these foreign stocks are brought home and can easily be bought just like other local stocks and shares through an individual’s trading account.
Foreign stocks listed as American Depository Receipts are few though.
This limits your power of choice while constricting you to the small range of stocks listed.
Exchange-Traded Funds (ETFs).
Another way available to United States investors to trade Hong Kong Stocks is indirectly through Exchange-Traded Funds (ETFs).
There are specific Exchange-Traded Funds in the local stock exchanges like the New York Stock Exchange (NYSE) which can easily expose you to Hong Kong Stocks.
- iShares MSCI Hong Kong ETF (NYSE: EWH).
- First Trust Hong Kong AlphaDEX Fund (NYSE: FHK).
Through the above and many more Exchange-Traded Funds, investors get the opportunity to indirectly trade Hong Kong Stocks.
Exchange-Traded Funds (ETFs) track the performance of various indices and stocks.
They, therefore, provide a suitable way of spreading and reducing the risk of investment.
Must you really be a U.S investor to trade Hong Kong Stocks in the above manner?
Wherever you are, as long as you can access the New York Stock Exchange (NYSE) or any other stock exchange which offers Hong Kong Stock-based ETFs, you are good to go.
Effecting Hong Kong Stock Trading.
We have so far established two major ways you can trade Hong Kong Trades. How about we get to see how these two ways are actually effected?
The above ways of trading Honk Kong Stocks can be effected via:
- Local Stock Brokers
- Hong-Kong Based Stock Brokers.
Local Stock Brokers.
Did you know you can actually trade Hong Kong Stocks through your local broker and not necessarily a broker abroad?
Thing is, you need to open a stock trading account with a broker in your country, but that broker must allow international trading.
The assumption here would actually be that if the broker allows international stock trading, then they offer a wide range of exchanges including the Hong Kong Stocks.
Go that extra mile and find out if your local broker actually allows Hong Kong Stocks trading.
Alternatively, your local broker can give you access to other international exchanges that actually have Hong Kong stock listed.
Most brokers charge commissions for Stock trading. You may want to see the commission structure and gauge if you can cope.
A good regulation goes without saying.
Is your local broker well regulated in your country and internationally? If so then, you are on the right platform.
Trusted brokers for this in the U.S include:
- E*Trade (ETFC).
- Interactive Brokers (IBKR).
Hong Kong Based Stock Brokers.
If you do not want to operate with local brokers, here is an alternative.
Look for a broker based in Hong Kong, open a stock trading account, and easily access Hong Kong Stocks.
Not all brokers in Hong Kong offer Hong Kong Stocks, so you may want to know which brokers do and which ones don’t.
For the safety of your money, let the broker be well regulated in the country and internationally.
Enough market experience and affordable commissions on stock trading are also important checks to apply in choosing a broker.
Go ahead and start trading Hong Kong Stocks only if all checks are met.
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