HKEX reported record revenue for the nine months as ended in September 2018. It is the right time to invest in Hong Kong Stocks. Hong Kong is Asia’s third-largest stock market behind Tokyo exchange and Shanghai Exchange in term of market capitalization. It has generated record high revenue $12296m as at the end of nine-month in Sept 2018. Profit attributed to the shareholder is $7484m. What can be the right time to invest in Hong Kong Stocks other than now?

If you are a beginner in stocks trading you need to go step by step to become a potential investor from an amateur trader. But, Before jumping into the steps, you should be aware of the market first and its index so that you have better depth of stock trading knowledge. Hong Kong Stock Exchange(HKEX) is the market to trade securities of the companies listed in it. Along with that it also performs as a clearing house for shares.

There are 1955 listed companies in which 989 from mainland China (also known as Red Chip, H share, P share), 856 from Hong Kong and 110 from other countries and region. Index for the listed companies of HKEX is Heng Seng. It is a free floated-adjusted market capitalization weighted stock market index of Hong Kong. Stock Indices is the platform for stock trading of top companies. You can also buy index in spite of buying individual stocks.

Now, without further ado, MVR is sharing with you the important steps to how to start trading in HKEX.

1.Organize your purpose of trading

Before investing in HKEX you should know why do you want to trade, What is your purpose, what is the financial goal that you want to fulfill with this investment. Know if you will be able to trade daily or weekly. If you have a full-time job then how will you manage to do your research. You have to decide a few things before you start trading. If you want to trade daily then you can plan day trading in which you can open and close your position within a day. If you want to trade on weekly basis you can go for swing trading. These are the factors that you should consider before trading in the Hong Kong Stock Exchange.

2.Understand the market

If you want to start an investment in any platform whether it is the stock investment, forex, commodity or anything investment market, you must understand the market; how it runs, what are the elements that can affect the price movement. Hong Kong Stocks and Clearing Ltd is the security trading and clearing system of Hong Kong. Along with that, it also trades ETFs(Exchange Traded Fund), REITs (Real Estate Investment Trust), and debt securities. If you want to know what is the latest news in the market you have to keep eye on it. You should also understand the risk related to HKEx market. There are several types of risk associated with the stock market they are namely

  • Market Risk – Also known as systematic risk. It occurs due to economic, geographical, political and social factors.
  • Interest Rate Risk – As HKD is related to USD, change in interest rate in The US can affect the price change in Hong Kong. Interest rate change within the country also determines the price of stocks.
  • Policy Risk – Any change in government policy especially related to finance, can affect the price movement in Hong Kong. Therefore you should be aware of government policies as well to mitigate risk related to stock.

3.Understand your finances

Strong understanding of your budget is very important before starting any investment. If you jump into investing without any plan and without analyzing your budget, you might face high risk during your period of trading. Also while buying stocks from HKEX, do not buy multiple stocks altogether instead buy one stock at a time, in this way you can save money of extra commission. Start buying shares as long as you can afford 100 stocks. Investing in stock is not that expensive if you keep a clear financial strategy to manage money.

4.Find a broker or Trading Platform

Now, when you have a thorough understanding of the market, you have a crystal clear financial goal and strategy to trade stocks. Now do the research and find a broker or any authentic trading platform to open a trading account. You can open CCASS (Central Clearing and Settlement System) account which is a securities settlement system in Hong Kong Exchange Clearing Ltd. and operated by it as well. Various category participants are involved in it, they are; Direct Cleaning Participant, clearing agency participant, stock pledge participant stock lender participant. There are many stockbrokers and online advisory services available in Hong Kong that provide aids for stock trading. A trading platform must have these characteristics:

  • Cost reliable
  • Transparent with its policy
  • Update with latest market tips and strategy
  • Offer tools for research and support for trading

Boom securities, Philip Securities, Polaris Securities etc are few of the pioneers in the online stock brokerage. You can open a trading account with the assistance from them. Money value research is also one useful platform to manage your trading account and to help you to trade more profitably. We also provide the latest stock picks alert for HKEx.

5.Practice trading before depositing money

These trading platforms usually provide demo account or free trials for a few days.

So, before depositing your money in the real trading account you can always practice in demo account or test their service in the duration of the free trial. Demo account gives you vision how will you trade in real stock exchange but with fake money. You can trade similarly as in real trading account but losing and gaining money won’t mean real loss or gain respectively. A demo account is very useful for naive traders.

The bottom line beginning of stock trading is both exciting and scary, you will learn many things with the time. But if you will follow the above steps of how to start trading in Hong Kong Stock Exchange with the better strategies you might find easy to trade in HKEX. Remember, starting to trade is one thing but become a successful trader is whole other story. Hong Kong stock exchange is a de facto robust market in Asia and the largest financial sector in the world. This is the right time to start trading in Hong Kong Stock Exchange.

As Milton Friedman once said, “If you want to see capitalism in action, go to Hong Kong.”

Subscribe to our free trial now for proficient investment and expert account management.

MVR provides latest stock HK stock pick with a special offer for blue chip and H-share stocks.