Investing in Hong Kong Stocks: A Beginner's Trading Guide

Hong Kong Stock Exchange, as a global financial hub, has over 2,600 listed companies with a total market capitalization of HKD 38 trillion. Well-known companies such as Tencent, Alibaba, and BYD are listed here. To participate in Hong Kong stock investments, it is essential to understand the market operation mechanisms and investment strategies.

Detailed Explanation of the Hong Kong Stock Trading System

Trading Session Settings

The HKEX implements a segmented trading system, including three phases:

• Auction Phase (9:00-9:30): Price discovery process before market open
• Continuous Trading (9:30-12:00, 13:00-16:00): Main trading periods
• Closing Auction (16:00-16:10): Final trading opportunity before market close

Trading rules vary across different periods, and investors should understand the specific requirements of each stage.

Core Trading Features

Hong Kong stocks operate under a T+0 trading system, meaning that stocks bought on the same day can be sold on the same day, with no limit on the number of trades. The settlement cycle is T+2, so funds sold on Monday can be withdrawn as early as Wednesday.

The minimum trading unit is 1 lot, with the specific number of shares varying by company. For example, Tencent (00700) 1 lot equals 100 shares, while other companies may require up to 100,000 shares.

The Hong Kong market has no daily price limit, but large-cap stocks (constituents of the Hang Seng Index and Hang Seng China Enterprises Index) will trigger a “cooling-off” mechanism if their price fluctuates more than 10% within 5 minutes, restricting trading price ranges. After 5 minutes, normal trading resumes.

Limit Orders and Opening Rules

The HKEX stipulates that limit orders must be within 24 points of the current price; some brokers may further restrict this to within 10% of the current price. The opening price is determined at 9:20 a.m. by the exchange.

Three Channels to Invest in Hong Kong Stocks

Method 1: Direct Investment in Stocks

Hong Kong stock codes consist of 5 digits starting with 0. The market is divided into the Main Board and the Growth Enterprise Market (GEM), with GEM codes starting with 08.

Current Situation Comparison: The HKEX has a total of 2,626 listed stocks, including 2,307 on the Main Board and 319 on GEM. Main Board companies generally have more stable financials, while GEM stocks tend to have smaller market caps and higher risks. Beginners are advised to start with blue-chip stocks on the Main Board, such as Tencent and Alibaba.

Hong Kong stocks support short selling, with around 1,000 stocks eligible for margin trading. There are profit opportunities whether the market rises or falls.

Account Opening Channels: Open an account through a Hong Kong stock broker, using HKD or USD, with exchange rate risks involved.

Method 2: Index and ETF Investment

Individual stocks are more volatile and riskier. For investors with limited risk tolerance, index investing is a safer choice.

Main Hong Kong Indices:

• Hang Seng Index (HSI): The most representative, includes the largest-cap companies on the Main Board. As of March 2025, it comprises 83 stocks with a total market cap of HKD 27 trillion, accounting for 67.92% of the total Hong Kong stock market value.
• Hang Seng China Enterprises Index (HSCEI): Focuses on Chinese-funded enterprises
• Hang Seng Tech Index (HSTECH): Concentrates on technology companies

Investing in indices mainly involves index futures and ETFs. Futures have higher thresholds (usually starting at HKD 50,000), while ETFs are more suitable for ordinary investors.

ETFs track specific indices and can be bought and sold like regular stocks. Examples include the Hang Seng Index ETF, Tracker Fund (02800), and MSCI Hong Kong ETF (03115).

Method 3: Contract for Difference (CFD) Trading

For short-term traders, CFDs are an efficient option. CFDs are derivatives tracking stock prices, offering the following advantages:

Cost Benefits: No commission, only spreads and overnight fees, with rates significantly lower than traditional trading.

Leverage Flexibility:

• Individual stocks typically offer 1-30x leverage
• Index leverage can go up to 200x
• Much higher than traditional brokers’ 2-4x

Cost Example: Buying 1 lot of Tencent (00700.HK) normally costs about HKD 35,000, but via CFD it costs less than $5 USD.

Risk Warning: Leverage amplifies both gains and losses; use cautiously.

Notable Hong Kong Stock Investment Targets

Blue-chip stocks are suitable for long-term holding due to their large size and stable operations. The following are representative stocks:

Practical Steps to Start Investing in Hong Kong Stocks

Step 1: Account Registration

Choose a suitable trading platform to open an account. Most platforms offer demo accounts for beginners to practice, with virtual funds up to USD 50,000, allowing risk-free experience of the entire trading process.

Step 2: Fund Deposit

Once ready for real trading, deposit funds via Visa/Mastercard or other methods. For first-time users, credit card deposits usually incur the lowest fees.

Step 3: Product Search

Use the platform’s search bar to locate stocks by name or code. For example, search “Tencent” or “0700” to find Tencent’s trading page.

Step 4: Place Orders

Set order parameters on the product page: buy or sell direction, quantity, leverage, stop-loss and take-profit levels, then confirm to execute immediately.

Trading Example: With 10x leverage, buying 1 lot of Tencent stock requires only about $4.50 USD, greatly lowering the participation threshold.

Investment Recommendations

Investing in Hong Kong stocks should be aligned with your risk tolerance. Beginners are advised to start with Main Board blue chips or index ETFs, accumulate experience, and then explore derivatives trading. Establishing a stop-loss and take-profit plan and strictly controlling risks are fundamental to long-term profitability.