Table of Contents
What is the Hong Kong Stock Exchange (HKG)
Let me tell you directly: the Hong Kong Stock Exchange (HKG) is a stock exchange located in Hong Kong. It's formally known as the Stock Exchange of Hong Kong, and it ranks as one of the world's largest securities markets based on market capitalization. I own and operate it as a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), which was set up as a holding company in 2000. On this exchange, you'll find various securities listed, such as equities and debt securities, among others.
Key Takeaways
Here's what you need to know upfront. The Hong Kong Stock Exchange operates right in Hong Kong. It's owned and run by Hong Kong Exchanges and Clearing Limited, which is a publicly traded holding company. You can trade equities, debt securities, and other types of securities there. Companies from Hong Kong and mainland China are actively traded on it.
Understanding the Hong Kong Stock Exchange (HKG)
As one of the main exchanges in Hong Kong, the HKG stands out as a top market in Asia. Like I mentioned, it's a subsidiary of HKEX, which also owns and operates the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company. As of January 2024, HKEX had a combined market capitalization of $3.97 trillion.
You'll find a range of securities available for investors, including equities, debt securities, derivatives, exchange-traded products (ETPs), real estate investment trusts (REITs), and warrants. By January 2024, there were 2,609 listings across HKEX subsidiaries, including the HKG— that's 2,428 domestic companies and 181 foreign ones.
Many of the biggest companies by market cap are banks and insurance firms from mainland China, such as the Industrial and Commercial Bank of China, China Construction Bank, Bank of China, and Ping An Insurance. Tencent Holdings, the Chinese internet giant, leads the pack by a wide margin.
Trading happens Monday through Friday from 9:30 a.m. to 4:00 p.m. local time. There's a pre-opening session from 9:00 a.m. to 9:30 a.m., and after-hours trading from 4:00 p.m. to a random close between 4:08 p.m. and 4:10 p.m. For derivatives, trading starts at 9:15 a.m. and ends at 4:30 p.m., with some markets breaking at noon. After-hours for derivatives run from 5:15 p.m. to 3:00 a.m. the next day. The exchange closes for major holidays.
Important Note
Keep this in mind: Hong Kong's stock market held the fourth-largest position globally until January 2024, when India's market overtook it. Shares in India reached over $4.33 trillion in value, edging out Hong Kong's $4.29 trillion.
Special Considerations
The HKG is the prime spot for raising capital if you're an issuer from Hong Kong or mainland China. Growth in these markets comes largely from listings of mainland Chinese companies, known as H-shares on the HKG. This growth ties directly to China's massive economic expansion.
To list, you need a minimum market capitalization of HK$500 million and a minimum public float value of HK$125 million. The exchange increased these requirements in 2017 to boost trading liquidity and improve the quality of listed issuers.
History of the HKG
Securities trading in Hong Kong started back in 1891 with the establishment of the Stockbrokers' Association of Hong Kong. It changed its name to the Hong Kong Stock Exchange in 1914.
In 1921, another exchange called the Hong Kong Stockbrokers' Association was incorporated. It merged with the original in 1947, continuing under the Hong Kong Stock Exchange name. Automated ordering came in 1993, followed by options trading in 1995.
As I noted earlier, in 2000, the HKG merged with the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company to create Hong Kong Exchanges and Clearing, a publicly traded entity.
There used to be a physical trading floor, but electronic trading's rise led to its closure in 2017.
Who Owns the Hong Kong Stock Exchange
The Hong Kong Stock Exchange belongs to Hong Kong Exchanges and Clearing Limited, a publicly traded holding company. Besides the HKG, HKEX includes subsidiaries like the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company.
Can I Buy and Sell Securities on the Hong Kong Stock Exchange
Yes, the Hong Kong Stock Exchange lists securities from Hong Kong and mainland China. If you're a foreign investor looking to get involved, check with your brokerage to see if you can open an account for international markets. Make sure you research and do your due diligence before trading.
How Can I Invest in Hong Kong
You have options to tap into Hong Kong's stock market and economy. Consider buying shares in exchange-traded funds (ETFs) or mutual funds that include Hong Kong securities, American depositary receipts (ADRs) of Hong Kong companies, or index funds. For direct investment in Hong Kong-traded shares, speak to a brokerage about international investing capabilities.
The Bottom Line
The Hong Kong Stock Exchange began in the late 1800s and has grown into a key market in Asia and globally. It hosts companies from Hong Kong and mainland China, along with securities like derivatives and warrants.
Other articles for you
The theory of price explains how prices of goods and services are set by the interaction of supply and demand in a market economy.
A GDP gap measures the difference between an economy's actual and potential GDP, indicating underperformance or overheating.
An overnight index swap is a financial hedging tool where parties exchange fixed and floating interest rates based on an overnight index to manage short-term rate risks.
A feed-in tariff is a policy that guarantees above-market prices for renewable energy to encourage its development and adoption.
An origination fee is an upfront charge by lenders for processing a new loan, typically 0.5% to 1% of the loan amount, which can be negotiated or rolled into the mortgage.
Headline risk refers to the potential for news stories to negatively affect investment prices, sectors, or markets.
Form 1045 is an IRS form for individuals, estates, and trusts to request a quick tentative tax refund based on specific loss carrybacks.
Garden leave is a paid period where departing employees stay away from work to protect employer interests.
An auditor's report provides an independent opinion on whether a company's financial statements comply with GAAP and are free from material misstatements.
The spot market is where assets like commodities, currencies, and securities are traded for immediate payment and delivery, contrasting with futures markets.