Last updated August 15th, 2018.
The Hong Kong Stock Exchange is only Asia’s third largest. But it’s also the most internationally-focused and diverse one in the region.
Foreign firms list themselves in Hong Kong more than anywhere else in Asia. Microsoft, Prudential, Prada, and countless other multinationals can be traded in Hong Kong in addition to their home country’s stock exchange.
How do you trade stocks in Hong Kong as a foreigner? A lot of people do it through a brokerage account based in their home country. Yet brokers often charge substantial fees for international trades.
For example, top US broker Fidelity Investments charges HK$250 (US$32) per trade on the Hong Kong Stock Exchange. A brokerage in Hong Kong will charge you as little as HK$8 (US$1) for comparison.
We suggest setting up a local account because of this. You might not care about a US$64 round trip transaction cost if you’re making large trades. Most investors probably wince at that number at least a bit though.
Plus, there’s many other reasons to open a Hong Kong brokerage account… and it’s fairly easy to do so.
Why Trade Stocks in Hong Kong?
Hong Kong is Asia’s de-facto financial center. Because of this, investors have ample opportunities to profit from the entire region’s growth by trading stocks in Hong Kong.
Companies based in Hong Kong are obviously listed on the city’s stock exchange. But you aren’t just limited to Hong Kong stocks either.
Dozens of equities from Singapore, Japan, the United Kingdom, and other countries can also be traded. These are often dual/multi listed stocks of large multinational firms.
For example, Starbucks and Intel are both listed in the US – they’re also listed in Hong Kong though. A listing on the Hong Kong Stock Exchange lets these businesses raise more capital from investors based in Asia.
In addition, opening a Hong Kong brokerage account is one of very few ways to buy stocks in mainland China.
Foreign investors couldn’t buy stocks in China up until a few years ago. However, the Shanghai-Hong Kong Stock Connect launched back in 2014. It allows anyone with a Hong Kong brokerage account to trade stocks listed in Shanghai.
The Shenzhen Stock Exchange was also added to the link in 2016, further expanding the initiative.
Opening a Hong Kong Brokerage Account
There’s limited ways to open a Hong Kong brokerage account unless you make a trip to the city (which I highly recommend doing at some point in your life).
You still have options though.
Boom Securities is a brokerage in Hong Kong which lets foreigners, including US citizens, open an account with relative ease. The process can started online, and afterwards, you’ll have to mail them some documents.
Everything can be done from home and finished in about a week.
You can also trade stocks in Thailand, South Korea, Malaysia and other markets with a Boom account. This makes a Hong Kong brokerage account a great way to start investing in Asia.
Commissions are much higher than if you were to open a local account in each of these countries individually. But it’s still convenient having everything in one place.
I should note that InvestAsian isn’t related to Boom Securities in any way. However, I do have an account with them and am a satisfied client.
Saxo Bank is a Danish brokerage which has offices in Hong Kong. They offer services similar to Boom’s, but I have not used them myself.
Aside from stocks, buying property is another way to invest in the city. You might be interested in our ultimate guide to buying real estate in Hong Kong.
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