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Securities trading in Hong Kong was first seen in the mid-19th century. However, until the establishment of Hong Kong Stockbrokers Association (Currently known as Hong Kong Securities Association “HKSA”)in 1891, the official security exchange market was formally founded in Hong Kong.
The market mechanism of Hong Kong has become more mature and standardized, as well as responsive to international market quotations through more than a century of development. Hong Kong stock market possesses a complete legal supervision system with high transparency of listed companies’ information and good flexibility of trade suspension mechanism. The features of Hong Kong stocks include huge amount of stocks, implementation of T+0 transaction and unlimited price fluctuations. Especially for the dual-listing stocks that are listed in the A-share market and the Hong Kong stock market, they will form a “A+H” pattern which may imply the trends in A-share market based on their behaviors in Hong Kong market.
Hong Kong is a major market for listing and fund raising in Asia, it has the second largest fund raising scale in the world in 2020. Hong Kong is also the intersection of capital between Mainland China and offshore market, connecting China and the world. In 2018, HKEX introduced a new IPO listing rule that allows dual-class share companies and pre-revenue biotech companies to be listed on HKEX. This is a historic milestone in the reform of Hong Kong’s listing system.
Strict Market Supervision
Hong Kong Stock Exchange become one of the most efficient, fair and mature securities markets in the
world after more than 100 years of development. To ensure its high transparency and accountability, all
companies listed in the HKEX are under strict supervision in accordance to
international standard.
Abundant Investment Products
There are nearly 2,000 stocks in the HKEX with T+0 trading. Both long or short are
available. There are a wide variety of products to invest including many leading stocks that are not
available in A-shares.
Greater Investment Value And Arbitrage Opportunities
The share price of the same stock in HKEX is usually lower than that in A
shares with 60%-70% average discount, and the dividend payout ratio is much higher than A shares.
The arbitrage opportunity is enormous on account of large price difference between H shares and A
shares.
T+0 Trading, No Net Change Limit
HKEX transactions are T+0. Investors can close position immediately to reduce their
losses if they find that they made a wrong trade. Moreover, the HKEX does not
have the 10% price change limit. Investors can buy H-shares if the corresponding A-share hits its
10% limit up.
| Trading Sessions | Trading Rules |
|---|---|
| 9:00-9:15 Order Input Period | At-auction orders and at-auction limit orders can be entered, amended or cancelled during this period. |
| 9:15-9:20 No-Cancellation Period | Only at-auction orders and at-auction limit orders can be entered during the No-cancellation Period, and no orders can be amended or cancelled. |
| 9:20-9:22 Random Matching Period | Order matching will start randomly during this period. |
| After Matching-9:30am Blocking Period | At-auction Order : Any outstanding at-auction orders will be cancelled. At-auction Limit Order : Any outstanding at-auction limit orders at the end of the Pre-opening Session will be transferred to the Continuous Trading Session and treated as limit orders provided that the specified price of that at-auction limit order does not deviate 9 times or more from the nominal price. Such orders will be put in the price queue of the input price. |
| Trading hours | Trading Session |
|---|---|
| 9:30-12:00 | Morning Trading Session |
| 12:00-13:00 | Lunch Closing |
| 13:00-16:00 | Afternoon Trading Session |
| Trading Sessions | Trading Rules |
|---|---|
| 16:00-16:01 The Closing Auction Session (CAS) | Calculate and publish a Reference Price, no order input permitted. |
| 16:01-16:06 Order input period | At-auction orders and at-auction limit orders within the ±5 per cent price limit can be entered, amended or cancelled. |
| 16:06-16:08 No-cancellation period | At-auction orders and at-auction limit orders can be entered during this period. Prices of new at-auction limit orders must be between the lowest ask and highest bid of the order book, and no orders can be amended or cancelled. |
| 16:08-16:10 Random closing period | At-auction orders and at-auction limit orders can also be entered during this period but no cancellation and amendment is allowed. Prices of at-auction limit orders must be between the lowest ask and highest bid of the order book. |
HKEX transactions are T+0, stocks bought (shorted) can be sold (buyback) on the same day. Investors can sell (buyback) in time to reduce losses if they find that they had made a wrong trade.
HKEX settlement rules are T+2, that is, for stocks traded today (T0), the securities company and the clearing house will complete the settlement of funds and stocks on the second trading day after trade day (T+2).
For example, T0 is Monday, and settlement will be completed on Wednesday; T0 is Thursday, and settlement
will be completed on next Monday.
(Note: The above days are all trading days.)
