The Asia-Pacific region is increasingly being seen as the engine of future global economic growth. Markets in the region offer investors a range of opportunities, with Hong Kong, in particular, being home to several top stocks, including Alibaba, Bank of China and Tencent. This makes it an attractive market for UK investors looking to diversify out of their home territory.
How do you buy shares on the Hong Kong markets, and how is trade execution carried out in the territory?
To Trade or Invest?
If you’ve decided that you’d like to purchase shares in Hong Kong, there are broadly two ways to achieve this.
Firstly, you can opt to invest in them directly via a share dealing service. Trade execution in these instances is a relatively straightforward and well-defined process. If you choose to invest, you buy the shares outright and put up their full value upfront. You then become the owner of the physical shares, which means you will benefit if their price rises or you may see your initial investment decline in value if their price drops.
If the company offers dividend payments, you may receive them, and you could obtain voting rights that give you the chance to influence the future direction of the business.
Alternatively, a different form of trade execution is to trade shares using derivatives such as spread bets or CFDs. To do this only requires you to provide a small percentage of the trade’s full value. This is known as margin, and it allows you to open a position.
This allows you to speculate on falling or rising share prices, but you don’t own the underlying asset. This is an attractive means to trade shares because you don’t pay tax on their profits. You can then offset any gains from CFD trading against your losses for tax purposes.
Opening a Trading Account
To begin investing or trading in Hong Kong, you will need to open a trading or shares account with a platform that allows UK access and remote trade execution. This usually only takes a few minutes and may be accompanied by an app for easier access.
Live trading accounts are also available that allow you to trade against a share’s price movements. These often offer virtual funds to enable you to practice your strategy before risking your own money.
What are the Fees?
Any investment or trading strategy needs to consider the charges incurred for trading order execution in Hong Kong. Different platforms will have additional costs, so it may pay to shop around.
There will be a commission rate, a charge for converting pounds into HKD, and other possible charges and taxes, including custody fees, additional services and physical share certificate costs.
Choose Your Stocks
You then need to choose the stocks you wish to purchase. Hong Kong is home to a growing range of technology and fintech stocks, a burgeoning market across the region. Three of the biggest tech names, Baidu Inc, Alibaba and Tencent Holdings, are dual-listed in the US, making investing and trade execution straightforward.
Many popular shares are listed in Hong Kong, including Chinese giants the Bank of China, China Construction Bank and Industrial and Commercial Bank of China.
Low-Latency Trade Execution Based in the Territory
GIS HK offers industry-leading, low-latency execution-only services to a growing list of global clients. We’re based in the territory and understand local markets. Our innovative, technology-led, and experienced approach can make the process easier if you are a regular trader.
Call +852 3018 3009 or email [email protected]