The HKEX trading centre (also known as the Hong Kong Stock Exchange) was established in 1891 and is one of the largest stocks and derivatives markets in both Asia and the world. There were over 2,500 companies listed on the exchange in 2020. This article will run through the exchange’s history and how it operates, including its structure, trading hours and top companies. Additionally, this page will take you through how you can start HKEX trading today, with a guide and some helpful tips to get you earning profit. See a list of our top brokers for Hong Kong Stock Exchange (HKEX) trading below.
What Is The Hong Kong Stock Exchange?
The Hong Kong Stock Exchange, or HKEX trading centre, is an exchange in the Hong Kong SAR (Special Administrative Region). With a market capitalisation of USD 6.81 trillion (that’s HKD 52.96 trillion in the native currency) following its last annual report, it is currently ranking in the top 5 stock markets around the world. The HKEX has a monthly trading volume of USD 182 trillion and an average daily trading volume of USD 6.067 trillion.
The number of listed companies on the Honk Kong Stock Exchange grew to over 2,500 in 2020, greater than either of its mainland Chinese counterparts. It is one of the fastest-growing stock exchanges in the world and, as recently as 2008, it only had 1,200 listed companies.
The HKEX trading centre and Hong Kong securities markets can be traced back as far as 1866 but it was formally established in 1891 when the Association of Stockbrokers in Hong Kong was set up. In 1914, the name was changed to the Hong Kong Stock Exchange.
Until 1921, membership of the exchange was characterized by non-Chinese people. In 1921, the Hong Kong Stockbrokers’ association was formed. This was an all-Chinese stock market. The two continued separately until the end of World War II when they were merged.
Spurred on by the rapid growth of Hong Kong’s economy, new exchanges were born. By 1972, Hong Kong had four separate stock trading exchanges that were fit for operational procedures. There were many calls for a unified stock exchange and 1980 saw the formation of The Stock Exchange of Hong Kong Limited, with trading commencing in 1986.
Following the market crash in 1987, significant regulatory and infrastructural changes were put in place. In 1989, the Hong Kong Securities Clearing Company was created to implement a central clearing and settlement system for securities transactions.
In 2000, the Hong Kong Securities Clearing Company and Hong Kong Futures Exchange were merged to form a new holding company, the Hong Kong Exchanges and Clearing Limited (HKEX trading).
Hong Kong Stock Exchange’s Structure
Right now, the main members of the board of the HKEX trading company are the CEO Nicolas Aguzin and the chairman Laura Cha.
The main regulatory board for the Hong Stock Exchange (HKEX) is the Securities and Futures Commission (SFC). The primary role of the regulator is to implement any legislation and protect investors. It has four operational units:
- Enforcement Division: This HKEX trading centre division focuses on investor protection. It ensures market integrity is upheld through surveillance and enforcement.
- Corporate Finance Division: This department oversees all listing and cash trading procedures, controls stock exchange listing activities and oversees the administration of security legislation.
- Supervision of Market Division: This division both monitors and supervises clearinghouses and stock exchange activities.
- Intermediaries and Investment Products Division: These define authorization requirements for the financial integrity of listed intermediaries.
Hang Seng Index
The main index for the HKEX trading market is the Hang Seng Index, compiled of the top 50 companies listed on the exchange. These 50 companies represent around 58% of the entire market capitalisation of the Hong Kong Stock Exchange.
It is a capitalisation weighted index, which means the components are weighted according to the total market value of their outstanding shares.
There are a few other indices of note that relate to the HKEX trading centre:
- FTSE China 50 Index – The top 50 H-Shares, P Chips, and Red Chips on the Hong Kong Stock Exchange (HKEX).
- FTSE China A-H 50 Index – The top 50 A-Shares and H-Shares on the Hong Kong, Shanghai and Shenzhen Exchanges.
- Hang Seng China Enterprises Index – The top 50 H-Shares on the Hong Kong Stock Market.
- Hang Seng China-Affiliated Corporations Index – The top 25 Red Chips on the Hong Kong Stock Exchange.
Keen trading news followers may have noticed some recent announcements by the HKEX trading centre regarding updates to the rules for listing new companies. From January 2022, any company seeking to be listed on the main board must have earned at least HKD 80 million (USD 10.3 million) in combined profits in the three years before listing. This is a 60% increase from the previous requirement.
The Hong Kong Stock Exchange (HKEX) has a Growth Enterprise Market (GEM). This market allows companies that do not meet the profitability requirements of the main board to be posted as an IPO with a warning to investors that they do not meet the requirements.
Don’t have time to read chapter 5 and beyond of the HKEX trading rules? Fear not, we have a summary of the relevant rules for stocks and futures so that you know your rights and can focus on your daily trading system.
The Hong Kong Stock Exchange (HKEX) has a T+0 trading rule. This means that stocks can be bought and sold in real-time, without needing to wait a day. This is great for short-term economics as historical graphs, charts, trading prices and data show that the live prices of both indices and stocks can fluctuate heavily within hours. Real-time live quotes combined with no trading limits on timings mean investors can buy or sell shares within hours as the price changes and potentially make a profit.
Moreover, there is no price limit on the HKEX trading centre. There is no limit to the rising and falling of stock and index prices on the market. Keen traders will notice that this greatly increases the opportunities for trading participants and members to earn more money. Obviously, the risk is also increased, but experienced traders will use this to increase their trading turnover and maybe even experience a record period.
The HKEX trading hours are Monday to Friday for 5 hours and 30 minutes. The weekend consists of two non-trading days for the market.
The morning trading session for the HKEX trading centre runs from 09:30 to 12:00 HKST (that’s GMT+8 for UK traders). There is then a suspension of trading between 12:00 and 13:00 HKST for a scheduled lunch break. Following this, the afternoon period begins and the market is live from 13:00 HKST to the closing time of 16:00 HKST. The Hong Kong Stock Exchange (HKEX) does not have any night-time trading hours for ETFs, stocks, bonds or futures.
The Hong Kong Stock Exchange (HKEX) does have extended and after hours trading for securities and stocks. There is a pre-trading or pre-market session between 09:00 and 09:30 HKST and an extended morning session from 12:00 to 13:00 HKST.
The opening hours of the HKEX trading markets can be affected by natural events such as typhoons. In the event of a typhoon or rainstorm warning, operating hours will not begin until at least two hours have passed since the discontinuation of the warning. This can significantly impact the working hours of the exchange. If the warning has not ceased by 12:00 HKST, there will be no trading that day.
The HKEX trading calendar and holiday schedule is busy with closures and half-trading days. The dates that these fall on vary each year, so don’t look at the 2019 or 2020 calendars to see when the public holidays will be in 2021.
In total, the Hong Kong Stock Exchange (HKEX) is closed for thirteen days in 2021, with three half-trading days. If the market is closed today, there are plenty of other options with full trading hours within the year.
The list below details the trading hours for different holidays or notable dates in 2022 such as the Chinese New Year, Christmas Eve and New Year’s Eve (31st December 2021/2020/2019, etc.), so you don’t need to find a trading calendar pdf to see if HKEX trading is open today:
- New Year’s Day – January 1st – Closed.
- Chinese New Year – February 11th – Half-Day, 09:30 to 12:00 HKST.
- Chinese New Year – February 12th and 15th – Closed.
- Good Friday – April 2nd – Closed.
- Qingming Festival – April 5th – Closed.
- Easter – April 6th – Closed.
- National Day – May 19th – Closed.
- Dragon Boat Festival – June 14th – Closed.
- National Days – September 21st, October 1st, and October 14th – Closed.
- Christmas Eve – December 24th – Half-Day, 09:30 to 12:00 HKST.
- Christmas – December 27th – Closed.
- New Year’s Eve – December 31st – Half-Day, 09:30 to 12:00 HKST (Last trading day in 2021).
Northbound HKEX trading (the trading of mainland-listed stocks) is only permitted when the Shanghai and Shenzhen markets are open. For the northbound trading calendar, refer to the Shanghai and Shenzhen trading calendars.
Top Companies / Biggest Players
So, who are the biggest players in the HKEX trading markets and which company has the largest market capitalisation? We know you don’t want to waste time conducting an advanced search through all the companies, so we have compiled the top 5 listed companies with their market capitalisations below:
- AIA – HKD 6.764 trillion.
- Tencent Holdings – HKD 4.114 trillion.
- Industrial and Commercial Bank of China – HKD 2.878 trillion.
- China Construction Bank – HKD 2.167 trillion.
- Bank of China – HKD 1.803 trillion.
Why You Should Trade On The HKEX
While you won’t find many of the most popular US companies listed on the HKEX trading centre like Gamestop and Nio, it does have an interesting market with some exciting stocks trading. There are many popular stocks available on the market, such as Alibaba (NASDAQ stock code: BABA), Xiaomi, JD.com Inc, Kuaishou and L’Occitane.
HKEX trading also gives access to the mainland markets in China, which are not always open to foreign investment. Through the Hong Kong market, you can start trading these Chinese stocks in parallel with the more well-known stocks on the Hong Kong Exchange.
How To Start Trading On The HKEX
So, you have arrived at the address of the HKEX trading centre, entered the building and you are on the trading floor waiting to get started (figuratively of course). This guide will help you start trading on the market from abroad:
- Choose A Broker: The first step to HKEX trading is to choose a broker. There are lots of broker lists available and choosing the right one is important. One of the key things to compare in the search for the best brokers for Hong Kong Stock Exchange trading is the fees or charges. Shares in Hong Kong are subject to stamp duty and if the broker charges high fees and tariffs for trading stocks, bonds or futures, your profits will be eaten up. Find a broker with the right fee schedule for you. Another thing to look out for is customer service. Ensure the chosen broker clearly states contact methods and is available 24/7. Brokers with better customer service usually have better investor relations.
- Open And Fund An Account: Once you have decided on the broker that is right for you, start an application and register for membership. When you have filled out any trading arrangement forms required, you will need to deposit funds to trade on the Hong Kong Stock Exchange (HKEX). Some brokers will have a minimum deposit amount, while others may not. Watch out for currency conversions as these could incur further losses.
- Get A Trading Platform: With an account set up and funded, you need to find a platform, such as Metatrader 4 or Orion, that is supported by your broker to trade on the Hong Kong Stock Exchange (HKEX). Some platforms are web-based, while others can be downloaded as an app on your desktop or mobile. Get to know your chosen platform, its layout and how it works.
- Research And Buy Stock: Now you are all set up to buy stock on the HKEX trading markets. Research the daily trading values and past trends, investigate any past trading halt announcements, maybe read the prospectuses or check the logos and symbols of different companies. Check what you need, get ready and open your position.
It’s important to know what different trade terminology means and what you can and cannot do when it comes to HKEX trading. Other than standard trades where you directly buy and sell a stock, there are a few other trading mechanisms to know about.
When people refer to trading lots on the Hong Kong Stock Exchange (HKEX), they are talking about the minimum trading unit (i.e., 1 lot). 1 lot could be 100 shares, 500 shares, 1000 shares, etc., depending on the stock price.
Odd Lot Trading
Odd lot HKEX trading simply means that someone’s holdings in a specific stock are less than one lot.
The Hong Kong Stock Exchange (HKEX) features a block trade facility. Block trades comprise large orders that are negotiated privately, away from the public auction trading market. Orders of this size generally have a price range that is dependent on when they are filled and they can have a huge impact on the market. Block trade aggregation means the orders cannot be separated into individual orders. These orders are usually completed by trading businesses due to the amount of capital required.
Options trading is allowed on the Hong Kong Stock Exchange (HKEX). Essentially, an option is a contract linked to an asset such as a stock. The contract gives you the right to trade a set volume of stock at a predefined price some time in the future, making you a trading right holder. However, you don’t have to buy the stock under the trading rules if you don’t want to.
Whether you can use margin when HKEX trading or not will depend on your broker. Simply put, margin trading allows you to borrow funds from a broker so that you can put more capital down. This increases potential profits but also increases the risk of losses.
Wash trading is illegal on the Hong Kong Stock Exchange (HKEX) and most other stock exchanges. It is a form of market manipulation in which an investor simultaneously buys and sells the same stock or financial instrument through different brokers to create misleading activities in the marketplace.
This is another form of trading that is usually illegal on the HKEX trading centre and other exchanges. Insider trading refers to someone either being directly connected to a company or knowing someone who is and buying or selling stocks based on information that is not yet publicly known, saving them losses or making a profit in the process.
Cross trading is not permitted on the Hong Kong Stock Exchange (HKEX). A cross trade is a financial practice where buy and sell orders for the same stock or asset are offset without being recorded as a trade on the exchange, without disclosure.
Algorithmic (algo) trading is allowed on the HKEX trading markets. It is a method of automated trading where a computer program or API makes trades according to pre-programmed instructions and signals. This form of trading can be risky as it limits your manual input.
Tips For HKEX Trading
History Can Repeat Itself
While it doesn’t always happen this way, historical data, statistics and trends can indicate the future movement of a stock or asset on the Hong Kong Stock Exchange (HKEX). Look up historical charts and graphs on Tradingview for any company you are thinking of investing in, they may hold the secret.
Read The News
Staying up-to-date on the latest company announcements and financial news is key to HKEX trading. Announcements lead to status and value changes for companies and they could see stock prices enter a new phase.
If your broker offers one, a demo account is a great way to practise trading before staking actual money. They allow you to perfect your strategies and get a feel for the platform you have chosen. This way, by the time you start the real job on the Hong Kong Stock Exchange, you will be well versed in the different occurrences and tools at your disposal.
Final Word On HKEX Trading
HKEX trading offers access to one of the largest stock exchanges in the world. It has an extremely high market capitalisation and equally high trading volume, making it a very exciting place for traders to invest. Experienced traders should see this market as an opportunity to diversify their portfolios and invest in some of the biggest companies in the world, many of which are not available on western exchanges. Follow the tips above, keep an eye on the trading hours and calendar and start investing today. A full list of top HKEX brokers can be found here.
Can I invest in the Hong Kong Stock Exchange from the UK?
Yes, you can invest in the HKEX trading centre from the UK. In fact, it is easier than its Chinese counterparts, just register with an online broker that allows trading in Hong Kong and get started.
What is the best stock to buy on the Hong Kong Stock Exchange?
There is no simple answer or ‘best’ stock. Refer to the top 5 companies listed before, these usually have the highest trading volume and liquidity and so are a great place to start. However, other stocks and financial instruments may better suit certain strategies more than others.
Is HKEX trading open today?
The exchange is closed thirteen days of the year and operates a half-day on three others. Refer to our calendar to see if the exchange is open today.
Is the HKEX worth investing in?
HKEX trading provides access to one of the top 5 largest exchanges in the world and offers a great chance to diversify your portfolio with some Chinese stocks.
When is the best time to trade on the HKEX?
The HKEX is only open for 5 and a half hours each day, Monday to Friday. Any time within this short window will offer a high trading volume and liquidity.