Last updated August 11th, 2021.

 

The Hong Kong Stock Exchange is only Asia’s third largest in terms of market cap. Yet it’s the most internationally-focused trading platform in the whole region by far.

When it comes to secondary listings, foreign companies list themselves in Hong Kong more frequently than anywhere else in Asia. You can trade shares of Microsoft, Prada, Prudential, and countless other multinational firms on Hong Kong’s stock exchange.

How do you trade stocks in Hong Kong as a foreigner? Well, the easiest way is probably trading them through a brokerage based in your home country. It absolutely isn’t the best or lowest-cost method though.

A better idea is setting up a brokerage account in Hong Kong. You can set one up remotely, without getting on a plane and leaving home.

People typically buy foreign stocks through a brokerage account based in their home country. The problem is: brokers charge substantial fees for international trades.

For example, top US brokerage Fidelity Investments charges HK$250 (US$32) per trade on the Hong Kong Stock Exchange. A brokerage based in Hong Kong will charge you as little as HK$8 (US$1) as a comparison.

We suggest setting up a local account in Hong Kong partially because of this. You may not care about a US$64 round trip transaction cost if you’re making larger trades. Lots of investors might wince at paying such a commission at least a bit though.

Plus, there are many other reasons you should open a Hong Kong brokerage account.

 

Why Trade Stocks in Hong Kong?

Hong Kong is Asia’s de-facto financial center. Because of its status, foreign traders enjoy ample opportunities to profit from the whole region’s growth by owning stocks in Hong Kong.

Public companies which are based in Hong Kong are obviously listed on the city’s stock exchange. Yet you aren’t just limited to local stocks either.

You can trade equities from Malaysia, Japan, the United Kingdom, and other nations too. These are often dual/multi listed stocks of large multinational firms.

For example, Starbucks and Intel are both listed in the US. But they’re listed in Hong Kong as well. Having a secondary listing on the Hong Kong Stock Exchange lets these businesses easily raise funds from investors who are based in Asia.

In addition, opening a Hong Kong brokerage account is one of very few ways you can purchase 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 in 2014. It allows anyone with a brokerage account in Hong Kong to trade stocks that are listed in Shanghai.

The Shenzhen Stock Exchange was added to the link back in 2016, further expanding the initiative.

 

Best Ways to Open a Hong Kong Brokerage Account

There are 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. Three of them, in particular.

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 will have to mail them some documents.

Everything can be done remotely, from home, and completely finished in around a week or two.

You can also trade stocks in Thailand, South Korea, Indonesia and other difficult-to-access markets with a Boom account. Having a brokerage account in Hong Kong is indeed a great way to start investing all across Asia.

Trade commissions are much higher than if you were to open a local account in each of these countries individually. Nonetheless, it can be difficult to access Asia’s smaller, niche markets. Keeping all your Asian stocks in one place is convenient too.

A good second option is through the trading app “moomoo“, which is a stock investment platform backed by Futu Holdings and Chinese tech giant Tencent. 

It’s worth mentioning that moomoo is registered in the United States and Singapore as well. Thus, in addition to a Hong Kong brokerage account, you can easily open a Singaporean or US trading account if you’re based in any of those jurisdictions.

The only negative aspect of moomoo compared to the other brokers mentioned in this article is that you’re locked out from more exotic markets like Thailand and Vietnam. But that shouldn’t matter if you’re only interested in trading stocks in Hong Kong.

Your third option is using Saxo Bank, which is a Danish brokerage with an office in Hong Kong. They offer services similar to Boom Securities and are frequently recommended by foreign expats.

In summary: opening a Hong Kong brokerage account isn’t just a superb way to invest in greater China.

Hong Kong also serves as a stock trading hub, and setting up roots here can help you invest throughout the entire Asia-Pacific region.

 

Skip the Next Western Recession

Learn the best places to invest - and where to avoid - by downloading our free Investment Cheat Sheet.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an international stock trader and property investor based in Thailand, Cambodia, and several other places. Reid manages the world's first and only frontier market real estate fund and has been featured in publications such as Forbes, Property Report, the South China Morning Post, and Seeking Alpha. You can download his free investment guide by clicking here.

You Might Also Like

Share This