Hong Kong Stocks Introduction: Start Investing in the Asian Market with These Outstanding Companies

Why Are Hong Kong Stocks Worth the Attention of Taiwanese Investors?

When it comes to investing in Asian stock markets, many people first think of the US or Japanese markets, but they often overlook an important opportunity—the Hong Kong stock market. For Taiwanese investors, Hong Kong stocks are not only a stepping stone into the international market but also an excellent channel to access China’s economy and grasp global technology trends.

The Market’s Own Attractiveness: The Hong Kong stock market has been trading since 1866, with over 150 years of history. After more than a century of evolution, it has become one of the most mature and fair markets globally. Clear trading rules and strict regulatory systems allow investors to deploy their strategies with confidence. As of May 2025, the total market capitalization of Hong Kong stocks reached $5.2 trillion USD, ranking among the top in the global securities markets.

Geographical Advantages Not to Be Overlooked: Taiwan, Hong Kong, and Mainland China are in the same time zone, with almost identical trading hours and no language barriers. Compared to investing in European or American markets, which require overcoming time differences and cultural barriers, investing in Hong Kong stocks is evidently more advantageous. With the Shanghai-Hong Kong Stock Connect now operational, capital flows between the two regions are more convenient, and the steady influx of mainland funds provides ample liquidity for Hong Kong stocks.

Rich Investment Options: The Hong Kong securities market offers over 1,000 stocks, numerous mutual funds, and bonds for investors to choose from. Whether seeking stable blue-chip dividends or growth potential in emerging companies, investors can find suitable targets.

Two-Way Trading Mechanism: Unlike A-shares, Hong Kong stocks allow both long and short positions, giving investors opportunities to profit in rising and falling markets. Additionally, Hong Kong stocks do not have daily price limit restrictions, offering greater profit potential.

Basic Overview of the Hong Kong Stock Market

The Hong Kong Stock Exchange (HKEX) was formed in 1986 through the merger of several exchanges and remains Hong Kong’s sole official securities trading platform. The market is divided into the Main Board and the Growth Enterprise Market (GEM). The Main Board includes blue-chip and large-cap companies, while GEM mainly lists small and medium-sized enterprises.

Market-wise, Hong Kong stocks mainly include Blue Chips (constituents of the Hang Seng Index), H-shares (Chinese state-owned enterprises listed in Hong Kong), and Red Chips (companies incorporated outside China but operating within China).

Trading System Features: Trading hours are from 09:30 to 12:00 and 13:00 to 16:00 Taipei time, with a one-hour lunch break. Hong Kong stocks use a “T+0” trading system, meaning stocks bought on the same day can be sold on the same day, with settlement on T+2. Trading units are usually measured in “lots,” with specific lot sizes determined by the issuing company.

Major Indices: The Hang Seng Index comprises the 50 largest Hong Kong-listed companies, representing the overall performance of large-cap stocks; the Hang Seng China Enterprises Index focuses on Chinese H-shares; and the Hang Seng Tech Index includes technology and internet companies, serving as an important reference for the tech sector in Hong Kong stocks.

Core Differences Between Hong Kong Stocks and US Stocks

The two markets differ in several aspects. Hong Kong trading hours align with Taiwan’s time zone (09:30-16:00), while US markets operate overnight in Taipei time (Summer Time 21:30-04:00, Winter Time 22:30-05:00). In terms of main industries, Hong Kong stocks focus on finance, real estate, and technology (mainly Chinese concept stocks), whereas US stocks cover a broader range including technology, consumer, healthcare, and semiconductors.

Both markets have no daily price limit, but their minimum trading units differ—Hong Kong stocks are traded in lots, US stocks in single shares. Regarding dividend taxes, Hong Kong imposes a 10% withholding tax on non-residents (which Taiwanese investors can reduce to 21% using W-8BEN), generally lower than the US. The Hong Kong market has only one exchange (HKEX), while the US has multiple exchanges such as NYSE and NASDAQ.

Overall, Hong Kong stocks’ biggest advantages are their trading hours matching Taiwan’s schedule, relatively low dividend tax, and flexible trading system, making them more accessible to Taiwanese investors.

Notable Hong Kong Stock Picks

Currently, Hong Kong stocks are at relatively low levels. Choosing the right companies is key to successful investment. Here are several companies with market caps over HKD 200 billion that are worth attention:

Tencent: The Social Ecosystem Titan of Hong Kong Stocks

Stock Code: 0700.HK | Market Cap: approx. HKD 473.76 billion | P/E Ratio: about 23.18x

Tencent, as the largest company by market value on HKEX, is a leader in China’s communication and social services, and the biggest internet company in China. Founders Ma Huateng and Jack Ma are known as the “Two Ma,” and many Chinese internet companies’ backers are either Tencent or Alibaba.

In early 2021, due to tightening game regulations, fintech compliance, and anti-monopoly investigations, Tencent’s stock price fell from its all-time high of HKD 775. However, as policy environments stabilized, by 2024 Tencent’s stock rebounded from lows and, as of June 2025, remains in the HKD 400-450 range, with a P/E ratio of about 23x—below its five-year average, making valuation attractive.

Tencent’s irreplaceable social ecosystem, diversified revenue streams, and improving policy environment make it a relatively stable long-term investment target.

BYD: Global Leader in New Energy Vehicles

Stock Code: 1211.HK | Market Cap: approx. HKD 50.65 billion | P/E Ratio: about 28.13x

Founded in 1995 as a battery manufacturer, BYD has developed into a global leader in new energy vehicles. In 2024, global sales reached 4.27 million units, surpassing Tesla to become the world’s top seller of new energy vehicles, ranking fourth globally among car brands.

Financially impressive, with revenue around USD 107 billion in 2024, up 29% YoY; net profit of RMB 40.25 billion, up 34% YoY. The gross profit per vehicle is about 21.02%, higher than Tesla’s 17.9%. Accelerating international expansion, establishing production bases in multiple countries, helps reduce costs and expand market share.

CNOOC: Stable Energy Sector Support

Stock Code: 883.HK | Market Cap: approx. HKD 88.02 billion | P/E Ratio: about 6.04x

CNOOC (China National Offshore Oil Corporation) is China’s largest offshore oil and natural gas producer. In 2024, crude oil output reached 530 million barrels, natural gas production about 115 billion cubic meters, demonstrating stable production capacity. According to IEA forecasts, natural gas demand will grow at an average annual rate of 2% over the next decade, benefiting its gas business. Financially, it remains relatively steady with a low P/E ratio of 6x.

Risks to watch include global oil price fluctuations, environmental policy changes, and geopolitical impacts on operations.

Baidu: The Search Engine Giant of the AI Era

Stock Code: 9888.HK | Market Cap: approx. HKD 24.41 billion | P/E Ratio: about 30.67x

Baidu, China’s largest search engine and AI technology company, reported total revenue of about RMB 32.5 billion in Q1 2025, a nearly 3% YoY increase. Growth is mainly driven by rapid development in cloud computing and AI.

In cloud computing, growth potential is significant; market research predicts China’s cloud market will grow at an average annual rate of 30% in the coming years. Baidu’s investments in autonomous driving platform “Apollo” also show long-term potential, attracting collaborations with multiple automakers.

Investors should be aware of increasing market competition and policy risks. As emerging companies like ByteDance rise, Baidu faces growing competitive pressure in advertising markets.

Pop Mart: The Global Promoter of Trendy Toys Culture

Stock Code: 9992.HK | Market Cap: approx. HKD 36.42 billion | P/E Ratio: about 108.73x

Pop Mart is China’s leading trendy toy company, known for original IPs and blind box products. Its IP Labubu has become a hit in recent years, with new product launches often selling out quickly. It currently has over 500 stores worldwide and more than 2,000 Robo-Shops across over 30 countries.

In Q1 2025, revenue grew 165% YoY, with overseas markets growing about 475%, showing remarkable growth. JPMorgan forecasts that the sales of the LABUBU series within “The Monsters” collection could reach RMB 14 billion by 2027.

Pop Mart’s performance remains in rapid growth, with outstanding overseas market and high-end IP commercialization, making it a stock to watch closely.

Ways for Taiwanese Investors to Access Hong Kong Stocks

Taiwanese investors have three main ways to enter the Hong Kong stock market:

1. Through Taiwanese Brokerage Firms via Custody Delegation:
Open an account with a local securities firm to trade Hong Kong stocks directly. Advantages include trading with TWD directly; disadvantages are only long positions allowed, no leverage or shorting, and higher transaction fees.

2. Through Hong Kong Brokerage Accounts:
Popular Hong Kong brokers like Interactive Brokers, Futu NiuNiu, etc. Advantages are lower fees; disadvantages include needing to convert to HKD or deposit in HKD, which involves exchange rate risk if depositing in USD, and smaller leverage for direct Hong Kong stock trading.

3. Trading via CFD Contracts(CFD):
CFDs allow traders to go long or short, support margin trading, and leverage to open positions at low cost, amplifying profits. Advantages include flexible operations, investing in individual stocks and indices, and no currency exchange issues; disadvantages are that platforms often focus on large-cap stocks, with limited options for smaller market cap stocks. Be especially cautious as leverage can multiply both gains and losses.

Risk Management Tips for Hong Kong Stock Investment

Choosing the Right Trading Platform Is Critical:
A good platform should protect your principal, offer strict risk warning mechanisms, and help you achieve stable returns.

Set Reasonable Stop-Loss Points:
Unlike the 10% daily limit in Taiwan and A-shares, Hong Kong stocks have no such limit. Therefore, risk management is even more important; set stop-loss levels within a reasonable range to prevent unexpected losses.

Diversify Investments to Reduce Risks:
Spread your capital across different stocks to avoid over-concentration. Light positioning and minimizing asset risk are key principles for investing in Hong Kong stocks.

Summary

Compared to the all-time high of the Japanese market, the near-record highs of the US market, and the Taiwan market, Hong Kong stocks are currently at a relatively low level, offering higher value investment potential. Unless one is extremely pessimistic about China’s economy, deploying capital into leading Hong Kong companies at this valuation is a rare opportunity.

When entering the Hong Kong stock market, choose the timing based on your investment preferences and risk tolerance. While stock price fluctuations bring risks, they also create opportunities. With many recommended stocks, investors should conduct in-depth research and careful selection to achieve long-term gains in this mature market.