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How-to Guide: Trading Stocks In Hong Kong


When it comes to trading stocks in Hong Kong, there are a few things you need to be aware of. Firstly, the stock market in Hong Kong is divided into two sections: the Hang Seng Index and the H-share index. The Hang Seng Index comprises stocks listed on the main board of the Hong Kong Stock Exchange, while the H-share index consists of stocks listed on the mainland Chinese stock exchanges.

Find a good broker

The most common way to trade stocks in Hong Kong is through a broker. Brokers can be either local or foreign, and you can find a list of licensed brokers on the Securities and Futures Commission website. When choosing a broker, it’s essential to consider their fees and whether they offer online or offline trading platforms. 

Get a trading account

You’ll need a trading account with your broker to buy and sell stocks, and it’s important to be aware of costs upfront. Some expenses you may include are deposit fees, transaction fees and commissions. Fees will vary depending on how you access your online trading platform: via an app on your smartphone, for example, or on a physical computer terminal at home or in the office. If you buy shares through an investment fund managed by a broker, their charges should also appear in their offering document.

Dividends

Hong Kong follows a “day-count convention” of 360 days per year regarding dividends. This means that if you hold a stock for less than 360 days, any dividends you receive will be pro-rated. For example, if you own a stock for 180 days, you would only receive half of the regular dividend payment.

Taxes

When it comes to taxes, Hong Kong has a relatively simple system. The first HK$2 million of taxable income is taxed at a rate of just 15%, while any income above that is taxed at 16%. Capital gains are also taxed at a flat rate of 16%. If you want more information about taxes in Hong Kong, you’ll find it on the Inland Revenue Department website.

Types of stock

When trading stocks in Hong Kong, it’s essential to be aware of the different types of stock available. There are three main types of stock: ordinary shares, preference shares and convertible bonds. Ordinary shares give shareholders voting rights and a share in the company’s profits, while preference shares usually have a higher dividend payout than ordinary shares. Convertible bonds can be converted into either ordinary or preference shares, depending on the terms of the bond.

Technical analysis

It’s also essential to understand the basics of candlestick charting and reading stock quotes. Candlestick charting is a type of technical analysis that uses price movements represented by filled or unfilled areas of a bar. The opening and closing prices of the stock, along with the high and low prices, determine the type of candle used to represent price movements.

Stock quotes

It’s also important to practice reading stock quotes quickly and accurately. There are five key elements: company name, timestamp (date and time), bid/ask spread (the difference in asking price for buying stocks and selling price for selling stocks), the volume traded (the total number of shares purchased and sold) and the share price. This information is usually listed on a trading screen when placing an order. 

Companies like Saxo Bank offer free demo accounts that let investors practice their trading skills before committing real money. For more information on Saxo Bank’s reputable online brokers, go to the site here.

Finally

Hong Kong is one of the world’s most important financial centres, with many stockbrokers and analysts stationed there. Businesses around the city are engaged in buying and selling stocks, including professional traders who make their living by buying or selling them for a profit. It’s important to remember that stock markets can be volatile and that past performance does not indicate future results. Always do your research before investing in any stock.

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