Hong Kong Stock Market Beginner's Guide: From Basic Knowledge to Selected Stocks

Current Status and Development Context of the Hong Kong Stock Market

Hong Kong’s stock market has a trading history of over 150 years and is considered one of the most mature capital markets in Asia. The first stock exchange in Hong Kong was established in 1891. After multiple mergers and reorganizations, it was ultimately consolidated into the “Hong Kong Exchanges and Clearing Limited” in 1986. In 2000, HKEX completed restructuring and went public, becoming Hong Kong’s only official securities trading platform.

According to the latest statistics, as of the end of May 2025, the total market capitalization of Hong Kong stocks reached approximately $5.2 trillion USD, ranking among the top in the global securities markets. This enormous market size reflects Hong Kong’s important position as an international financial hub.

Introduction to Hong Kong Stocks: Why Worth Attention

Market Regulation and Robust Oversight System

Hong Kong’s securities market is renowned for its clear and transparent trading rules and strict regulatory framework, with a leading global ranking in fairness of the investment environment. This rigorous market ecosystem provides investors with a solid confidence foundation.

Geographical Advantages and Cultural Proximity

For Taiwanese investors, Hong Kong’s stock market has natural geographical and cultural advantages. Both are located in East Asia, with closely aligned trading hours and seamless language communication. As the economies of Hong Kong, Macau, and Taiwan deepen integration, understanding regional policies and market trends becomes significantly easier, offering clear convenience compared to investing in European or American markets.

Rich Investment Options

Hong Kong’s securities market currently offers over 1,000 stocks, along with a vast array of funds and bond products, allowing investors to choose flexibly according to their needs. The market is divided into the Main Board and the Growth Enterprise Market (GEM), with the Main Board featuring leading companies like Tencent, Alibaba, and HSBC, while GEM mainly hosts innovative and growth-oriented firms.

Two-Way Trading Mechanism

Hong Kong stocks support both long and short positions, with no limit on price movement caps, providing relatively broad profit opportunities. Additionally, the “T+0” trading system allows stocks bought on the same day to be sold on the same day, greatly improving capital utilization efficiency.

Sufficient Liquidity

Since the launch of the Shanghai-Hong Kong Stock Connect, mainland and Hong Kong investors can buy and sell each other’s stocks, continuously injecting funds that bring abundant trading volume and liquidity support to Hong Kong stocks.

Simplified Trading Rules of Hong Kong Stocks

Trading hours are from 09:30 to 12:00 and 13:00 to 16:00 Taiwan time, with a one-hour midday break. Trading units are based on “lots,” with the number of shares per lot set by each company. The settlement system follows T+2, meaning settlement of funds and stocks occurs on the second business day after the transaction.

Regarding indices, the Hang Seng Index (HSI) is composed of the 50 largest Hong Kong stocks and serves as an indicator of overall large-cap performance; the Hang Seng China Enterprises Index (HSCEI) focuses on Chinese H-shares; the Hang Seng TECH Index (HSTECH) tracks Chinese technology and internet companies, making it an important tool for observing Hong Kong tech stocks.

Comparison of Hong Kong Stocks and US Stocks

Core Differences Analysis

The most notable features of Hong Kong stocks are the midday break, relatively low dividend tax, and differences in minimum trading units. Since Hong Kong and Taiwan are in the same time zone, Hong Kong trading hours better align with Taiwanese investors’ routines, making it more accessible.

Selected Hong Kong Stock Picks for Entry

Below are 15 listed companies with a market value exceeding HKD 200 billion. These enterprises lead their respective fields and are worth observing for investment reference:

In-Depth Analysis of Notable Hong Kong Stocks

Tencent Holdings—Hong Kong Stock Leader

Code: 0700.HK

Investors must focus on the largest market cap company; Tencent is the absolute leader in HKEX. Founded in 1998, Tencent has become China’s leader in communication and social services, and the largest internet enterprise. Its founders, Ma Huateng and Alibaba’s Jack Ma, are known as the “Two Ma’s.” Many Chinese internet companies’ backers are either Tencent or Alibaba.

In early 2021, due to gaming regulation, fintech compliance, and anti-monopoly pressures, its stock price fell sharply from a high of HKD 775. However, as policy environment stabilized, Tencent began a strong rebound in 2024. As of June 2025, the stock price remained in the HKD 400–450 range, with a P/E ratio of about 23, below the five-year average, highlighting attractive valuation.

Its irreplaceable social ecosystem, diversified revenue streams, and policy improvements make Tencent a stable long-term investment choice.

BYD Company—Leader in New Energy Vehicles

Code: 1211.HK

Founded in 1995, BYD initially specialized in battery manufacturing and has now risen to 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 was about USD 107 billion, up 29% year-over-year; net profit was RMB 40.25 billion, up 34%. The per-vehicle gross profit margin is approximately 21.02%, higher than Tesla’s 17.9%. Its international expansion is accelerating, with production bases established in multiple countries, aiding cost reduction and market share expansion.

China National Offshore Oil—Steady Energy Driver

China National Offshore Oil Corporation (CNOOC) is China’s largest offshore oil and natural gas producer. In 2024, crude oil output was about 530 million barrels, and natural gas output was approximately 115 billion cubic meters, demonstrating steady energy production capacity.

The International Energy Agency forecasts that natural gas demand will grow at an average of 2% annually over the next decade, benefiting CNOOC’s natural gas business. Its financial outlook remains relatively stable. However, investors should be aware of potential impacts from global oil price fluctuations, environmental policies, and geopolitical risks.

Baidu Group—AI and Cloud Computing Potential Stock

Code: 9888.HK

As China’s largest search engine and AI technology company, Baidu has long-term investment potential. In Q1 2025, revenue reached about RMB 32.5 billion, with nearly 3% YoY growth, driven mainly by rapid development in cloud computing and AI.

China’s cloud market is expected to grow at an average of 30% annually in the coming years, with significant growth space for Baidu. Its autonomous driving platform “Apollo” has attracted cooperation from multiple automakers, providing new growth momentum. Investors should watch for increasing market competition and regulatory policy changes that could pose risks.

Pop Mart—Trendy Consumer Newcomer

Code: 9992.HK

Pop Mart is China’s leading trendy toy company, known for original IPs and blind box products. Its popular IP Labubu has recently gone viral, with new product launches attracting long queues. It has over 500 stores worldwide and more than 2,000 Robo-Shops across over 30 countries.

In Q1 2025, total revenue increased by 165% YoY, with overseas markets growing about 475%. JPMorgan forecasts that the sales of the LABUBU series, part of THE MONSTERS, could reach RMB 14 billion by 2027. The company remains in a high-growth stage, with outstanding overseas market and high-end IP commercialization performance, making its development potential promising.

Investment Guide to Hong Kong Stocks

Method 1: Taiwan Brokerage Discretionary Trading

Open an account with a local Taiwanese securities firm to trade Hong Kong stocks directly. Advantages include using TWD for transactions and high convenience. Disadvantages are that it only supports long positions, no leverage, no short selling, and relatively higher fees.

Method 2: Hong Kong Brokerage Account

Use platforms like Interactive Brokers or Futu NiuNiu. Advantages are low transaction fees. Disadvantages include needing to convert to HKD or deposit directly in HKD; using USD deposits may incur exchange rate costs. Leverage for direct Hong Kong stock trading is limited.

Method 3: CFD Trading

CFDs support two-way trading, margin, and leverage, allowing investors to open positions at low cost and invest in stocks and indices diversely. Advantages include flexibility for long and short positions, leverage, and no currency exchange issues. Disadvantages are that platforms often limit options to large-cap stocks, making it difficult to trade small-cap stocks. Leverage can amplify gains and losses, requiring cautious operation.

Key Points for Investing in Hong Kong Stocks

Choosing a Reliable Trading Platform Is Crucial

Select a regulated, transparent, and well-supervised platform to ensure successful investment. A good platform should always protect traders’ capital, provide comprehensive risk warning mechanisms, and ensure reasonable returns.

Set Reasonable Stop-Loss Levels

Unlike the 10% limit in Taiwan and mainland China markets, Hong Kong stocks have no such mechanism. Investors need to pay more attention to risk management, setting stop-loss points within a reasonable range to prevent unexpected losses.

Diversify to Avoid Concentration Risks

Distribute funds across multiple stocks to avoid overexposure to a single asset. A light-portfolio strategy can effectively minimize asset risks and is a prudent investment principle.

Conclusion

Compared to the record highs of the Japanese stock market and the near-record highs of the US and Taiwan markets, the Hong Kong stock market is currently at a low point, making it a relatively valuable entry opportunity. Unless one is extremely pessimistic about China’s economic prospects, entering these undervalued leading companies at current prices is truly a rare opportunity.

Investing in Hong Kong stocks should be based on personal investment preferences and risk tolerance to choose the right timing. High volatility in stock prices brings both risks and opportunities; careful assessment is essential before initiating investment plans.