Hong Kong Stocks Beginner's Guide: The Complete Guide for New Investors

For Taiwanese investors, Hong Kong stocks are not only a gateway to the Asian market but also a crucial window to access China’s economy and global capital. This article will start from the fundamentals of the Hong Kong stock market, providing a detailed introduction to its trading mechanisms, differences from other markets, and highlighting several high-quality stocks worth paying attention to. Finally, practical methods for Taiwanese investors to open accounts and invest will be shared.

Why is the Hong Kong stock market worth paying attention to?

Market maturity and transparency leading Asia

Hong Kong’s securities market has a development history of over 150 years. Since the establishment of the first exchange in 1891, it has built a world-class regulatory system and trading rules. Compared to other Asian markets, Hong Kong stocks are known for their clear legal framework, strict information disclosure requirements, and independent market supervision, which is why many international investment institutions regard Hong Kong stocks as the preferred entry point into Asia.

Geographical and language advantages

Hong Kong, Taiwan, and Mainland China are located in East Asia, with similar trading hours and no time zone differences, making it especially convenient for Taiwanese investors. Compared to investing in European and American markets, which require dealing with time differences and language barriers, Hong Kong stocks are more accessible and easier to grasp market dynamics. As economic integration among Hong Kong, Macau, and Taiwan deepens, capital flows among the three regions are becoming more frequent, making understanding Hong Kong stocks an essential skill for Taiwanese investors.

Rich investment targets and large selection space

The Hong Kong Stock Exchange (HKEX) currently has over 1,000 listed companies across various industries such as finance, real estate, technology, and consumer sectors. The Stock Connect mechanism also allows investors to participate in the A-share market. Such a vast investment ecosystem enables investors to carefully select stocks based on their strategies.

Two-way trading mechanism offers more profit opportunities

Unlike Taiwan and A-shares, which have restrictions on long-only positions, Hong Kong stocks allow investors to short sell. In an environment without daily price limits, volatility is greater, which also means profit potential and risks are more significant. For traders skilled in trend analysis, Hong Kong stocks provide more strategic flexibility.

Basic structure of the Hong Kong stock market

Hong Kong’s main securities platform is the Hong Kong Exchanges and Clearing Limited (HKEX), which was formed through the merger of several exchanges in 1986 and restructured and listed in 2000. According to the latest data, the total market capitalization of Hong Kong stocks has reached approximately US$5.2 trillion, ranking among the top in the global securities markets.

Trading segments

Hong Kong stocks are divided into Main Board and GEM (Growth Enterprise Market). The Main Board includes large companies like Tencent, Alibaba, and HSBC, with high liquidity and stability; GEM mainly consists of small to medium-sized innovative companies with higher volatility. Since its redefinition in 2021, GEM mainly supports growth companies that do not meet the Main Board criteria.

Stock categories

Based on market concepts, Hong Kong stocks are mainly classified into Blue Chips, H-shares, and Red Chips. Blue Chips are the largest companies in the Hang Seng Index, representing the top quality listed companies; H-shares are Chinese state-owned enterprises listed in Hong Kong; Red Chips are companies incorporated overseas but with operations in China.

Trading rules to note

Hong Kong stock trading hours are from 9:30 to 12:00 and 13:00 to 16:00 Taiwan time, with a one-hour lunch break. The minimum trading unit is “lot,” with the specific quantity set by each company. Hong Kong stocks operate on a T+0 trading system, meaning stocks bought on the same day can be sold on the same day, with settlement T+2.

Major indices

The Hang Seng Index is the most important indicator of Hong Kong stocks, composed of the 50 largest listed companies; the Hang Seng China Enterprises Index focuses on H-shares; the Hang Seng Tech Index reflects the technology sector performance.

Core differences between Hong Kong stocks and US stocks

The biggest difference lies in trading hours and liquidity. Hong Kong stocks’ trading hours are closer to Taiwan’s schedule, avoiding night trading; US stocks require adjusting to US market hours. Additionally, Hong Kong dividend tax is relatively low, which benefits long-term income investors.

Selected Hong Kong stocks for Taiwanese investors

Given that Hong Kong stocks are currently at relatively low levels with good long-term value, here are 15 high-quality companies with market caps over HKD 200 billion for reference:

Tencent Holdings: Hong Kong’s flagship

Investors focusing on Hong Kong stocks should pay close attention to the largest market cap company. Tencent, founded in 1998, has grown into China’s absolute leader in communications and social services, with diversified businesses including messaging, gaming, and fintech. Many Chinese internet companies have Tencent’s investment backing, highlighting its strategic importance.

Its stock price reached a historical high of HKD 775 in early 2021 but retreated due to regulatory pressures on gaming and fintech compliance. As regulatory environment gradually clarifies, the stock has rebounded from lows and now trades around HKD 400–450, with a P/E ratio of about 23, below its five-year average. Supported by its social ecosystem moat and diversified revenue streams, Tencent remains a stable long-term investment choice.

BYD: The new energy star

Founded in 1995, BYD initially gained fame for battery manufacturing and has now become a global leader in new energy vehicles. In 2024, global sales reached 4.27 million units, surpassing Tesla to become the top seller of EVs worldwide, ranking among the top four automotive brands globally.

Financially impressive—2024 revenue is approximately US$107 billion, up 29% year-over-year; net profit is RMB 40.25 billion, up 34%; gross margin per vehicle is 21.02%, higher than Tesla’s 17.9%. With accelerated international expansion, BYD is establishing production bases in multiple countries, with potential in cost control and market growth worth watching.

China National Offshore Oil Corporation: Energy choice

CNOOC is China’s largest offshore oil and natural gas producer. In 2024, crude oil output reached 530 million barrels, and natural gas production was about 115 billion cubic meters, demonstrating a stable production foundation.

The International Energy Agency forecasts that natural gas demand will grow at an average annual rate of 2% over the next decade, creating favorable conditions for CNOOC’s natural gas business. However, investors should be aware of risks from global oil price fluctuations, environmental policies, and geopolitical factors affecting operations.

Baidu: AI wave leader

As China’s largest search engine and AI technology company, Baidu’s recent performance is worth watching. In Q1 2025, revenue reached RMB 32.5 billion, up 3% year-over-year, mainly driven by cloud computing and AI businesses.

The Chinese cloud computing market is expected to grow at an average annual rate of 30%, and Baidu’s investments in this area are promising. Its autonomous driving platform “Apollo” has attracted cooperation from multiple automakers, providing long-term growth potential. However, increased market competition and policy changes remain risks to consider.

Pop Mart: Trendy new star

Pop Mart is China’s leading trendy toy company, known for original IPs and blind box products. Its IPs like Labubu have become popular in recent years, with frequent queues for new releases.

The company is expanding rapidly globally, with over 500 stores and more than 2,000 smart vending machines across more than 30 countries. In Q1 2025, revenue grew 165% year-over-year, with overseas growth reaching 475%. JPMorgan predicts that the sales of the Labubu series could reach RMB 14 billion by 2027, indicating strong growth potential.

How Taiwanese investors can open Hong Kong stock accounts

Through Taiwanese brokerage firms via omnibus account

Open an account with a local securities firm to trade Hong Kong stocks. Advantages include settlement in TWD and familiarity with operations; disadvantages are higher fees, inability to short sell or use leverage, and limited liquidity.

Direct account opening with Hong Kong brokers

Hong Kong brokers like Interactive Brokers and Futu offer low commissions but require currency conversion or direct HKD deposits, incurring exchange rate costs. Leverage is also more limited, suitable for long-term value investors.

Contract for Difference (CFD) trading

CFDs support long and short positions with leverage, allowing investment in individual stocks and indices without currency exchange concerns. The downside is limited selection of small-cap stocks, usually only large-cap leaders. This method offers more flexibility and is suitable for advanced traders.

Regardless of the method chosen, investors should pay close attention to the regulatory status of trading platforms and risk warning features.

Key risk management tips for Hong Kong stock investing

Set reasonable stop-loss mechanisms

Hong Kong stocks have no daily price limits, and volatility can be much greater than Taiwan and A-shares. Therefore, risk management is crucial. Investors should pre-set reasonable stop-loss points before entering positions and avoid greed that ignores risks—this is the first line of defense to protect capital.

Diversify investments to reduce concentration risk

Avoid putting all funds into a single stock. Proper diversification across multiple stocks or industries can effectively reduce unsystematic risk. Using light positions and staggered entry strategies is also recommended to cope with potential sharp fluctuations in Hong Kong stocks.

Continuously learn about market mechanisms

Hong Kong’s T+0 trading, short selling, and absence of daily price limits differ significantly from Taiwan. Investors should spend time understanding how these mechanisms influence trading strategies to avoid mistakes caused by unfamiliarity.

Summary

Compared to the recent highs of the Nikkei, the near-record highs of US and Taiwanese stocks, Hong Kong stocks are currently at a relatively low level with attractive valuations. For investors who are not overly pessimistic about China’s economy, deploying capital into these leading companies at this level is a rare opportunity.

While entering the Hong Kong market is not complicated, understanding its volatility characteristics and trading rules is essential. Investors should choose entry timing and targets carefully based on their risk tolerance and investment goals. High volatility brings both risks and opportunities—key is whether you are prepared to seize them.