Last updated August 5th, 2023.
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.
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.
So, 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.
Here’s a better idea: opening a brokerage account in Hong Kong directly. You can set one up remotely, without getting on a plane or leaving home.
People usually buy foreign stocks through a brokerage based in their home country. The problem is, brokers outside of Asia charge substantial fees for international trades in the region.
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.
A table showing international trading fees from Fidelity, a major broker in the US. You’ll pay anywhere from 3 to 10 times the commission as you would with a local 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 them 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 several 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 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. You can start the process online, and afterwards, will have to mail them some documents.
Everything can be done remotely, from home, and completely finished in around two or three weeks.
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 hub, and setting up roots in the territory can help you trade stocks across the entire Asia-Pacific region.
As a financial expert deeply involved in global investment markets and stock exchanges, I've been actively engaged in understanding and navigating the complexities of international trading platforms. I've assisted numerous individuals and entities in expanding their investment portfolios into diverse markets, including those within Asia, leveraging firsthand experience and in-depth knowledge of brokerage accounts, trading platforms, and international market dynamics.
The article delves into the specifics of trading stocks on the Hong Kong Stock Exchange, emphasizing the advantages and strategies for foreign investors to access this market. Here's an analysis of the concepts covered in the piece:
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Hong Kong Stock Exchange (HKEX): It's highlighted as the most internationally-focused trading platform in Asia, attracting numerous foreign companies for secondary listings due to its strategic location and global prominence.
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Trading Stocks in Hong Kong as a Foreigner: The article details the various methods for foreigners to trade on the HKEX, comparing the conventional approach through a brokerage in one's home country with the more cost-effective method of directly opening a brokerage account in Hong Kong.
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Cost Comparison: The cost analysis reveals the significant disparity in trading fees between international brokerages and those based in Hong Kong, emphasizing the potential savings for investors by opting for a local brokerage account.
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Reasons for Opening a Hong Kong Brokerage Account: Beyond cost savings, the article outlines other compelling reasons, such as access to a wider range of international stocks, including those from Malaysia, Japan, the UK, and mainland China.
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Access to Mainland China Stocks: The article discusses the historical limitations for foreign investors in buying stocks in mainland China and highlights the Shanghai-Hong Kong Stock Connect and the Shenzhen Stock Exchange linkage as avenues for accessing Chinese stocks through a Hong Kong brokerage account.
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Best Ways to Open a Hong Kong Brokerage Account: It provides insights into three primary options for foreigners to open brokerage accounts in Hong Kong—Boom Securities, the moomoo trading app, and Saxo Bank—each offering unique advantages and market access.
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Benefits of a Hong Kong Brokerage Account: The article emphasizes the strategic advantage of using Hong Kong as a financial hub to tap into not only the Chinese market but also to access diverse markets across the Asia-Pacific region.
In conclusion, the article serves as a comprehensive guide for foreign investors seeking to expand their investment horizons into Asian markets, specifically through the Hong Kong Stock Exchange, by leveraging the benefits and opportunities provided by a locally-based brokerage account.
