Morning our favourite investors and readers.
Time flies so fast and its perfect day for HNFC to expand your horizons about investing.
Today will talk about Hong Kong Stock Exchange, its history and some interesting companies to
invest your hard earned money. Ready. Set. Go!
Hong Kong is major international financial centre. The Hong Kong stock exchange is the 6th largest in the world with a market capitalization value of shares of HK$3,065,500,000,000 (HKEX, 2017) and the third largest exchange in Asia behind Japan Exchange Group and Shanghai Stock Exchange (Worldatlas, 2017). The exchange currently has 1,758 listed companies.
The Hong Kong Stock Exchange was first formed in 1891 and was named “The Association of Stockbrokers in Hong Kong” and was the first Chinese Stock Exchange. The name then changed in 1914 to ‘The Hong Kong Stock Exchange’. In 1921 a second stock exchange, “The Hong Kong Stockbrokers’ Association”, was incorporated and in 1947 the two exchanges merged to form “The Hong Kong Stock Exchange Ltd”. By 1972 there were four exchanges operating in the Hong Kong district. The Far East Exchange Ltd, The Kam Ngan Stock Exchange Ltd, The Kowloon Stock Exchange Ltd & The Hong Kong Stock Exchange in 1973 the four exchanges standardise their trading sessions with effect from 8th of January. There were subsequently calls for the formation of a unified stock exchange and in 1980 The Stock Exchange of Hong Kong Limited was incorporated and trading on the Exchange finally commenced 6 years later on 2 April 1986. In 1987 the Stock Exchange is closed for four days in an attempt to stop losses during Black Monday, the global equities market crash. In 1988 the Ian Hay Davison Report, commissioned to investigate practices on the exchange in the lead-up to its closure due to corruption and insider trading, resulting in significant market reforms (HKEX, 2017).
Hong Kong’s financial markets are characterised by a high degree of liquidity and operate under effective and transparent regulations, which meet international standards. There are no barriers of access to the market by foreign businesses and individuals as well as no restrictions on capital flows into and out of Hong Kong which makes Hong Kong's financial Markets a perfect opportunity.
I would now like to share with you 2 companies listed on the Hong Kong Stock Exchange as well as an Index that I believe will have a fantastic run in throughout 2017/18.
The first stock I’d like to share with you today is: Sun Hung Kai Properties (Ticker: 0016.HK).
Sun Hung Kai Properties Limited ("SHKP") was publicly listed in 1972 and is now one of the largest property companies in Hong Kong. It specializes in developing premium-quality residential projects, offices and shopping centres. The Group employs over 37,000 people (Sun Hung Kai Properties, 2017). According to Forbes Hong Kong’s housing market is the most expensive in the world for the seventh year in a row (Forbes, 2017). The cities housing prices have skyrocketed in recent years, driven by low interest rates and mainland Chinese buyers with prices expected to continuously rise. Sun Hung Kai Properties has strong financials with revenue and gross profit increasing since 2013. Dividend payments have also been on the increase, with a credit rating of A+ by standard and poor’s. This stock looks strong with the potential to continuously increase in value. If you would like to read more about the company here is their website.
The second stock I have chosen is: TENCENT (Ticker: 0700.HK)
Tencent is a leading provider of internet value added services in China and went public on the HKEX in June 2004. Tencents main operations include communication, information, entertainment & financial services providing social platforms and digital content services under the “Connection” strategy. Sinces its establishment, Tencent has maintained steady growth under its user-oriented operating strategy (Tencent, 2017). This is shown with excellent financials this includes steady year on year revenue growth and profit. Total Assets have also been increasing showing good signs of growth with no slowing down. More information about Tencent is here.
My third pick is the Hang Seng Index Tracker fund (Ticker: 2800.HK). Although not a stock as such it tracks the 49 largest companies traded on the Hong Kong Stock Exchange. It is used to record and monitor daily changes and is the main indicator of the overall market performance in Hong Kong. These 49 companies represent roughly 70% of the capitalization of the Hong Kong Stock Exchange. The components of the Hang Seng Index are divided into four subindexes: Commerce & Industry, Finance, Utilities & Properties (Stock Exchange Secrets, 2017). I have picked this Index because this will increase portfolio diversification which in turn will reduce risk; the saying ‘don’t keep all your eggs in the same basket’ should be kept in mind when picking stocks. Since the beginning of February 2016 the index has increased from 18,486 to 27,668 to date. This is an impressive 49.67% increase.
Here we've prepared a list of useful resources if you decide to trade on Hong Kong Stock Exchange:
Thank you for your time.
We would be very grateful for your feedback, feel free to ask any questions.
If you enjoyed reading the article please share it with your friends. Your support means a lot to us.
Written by Ben Cousen │Young financial analyst and Co-founder of HNFC
Edited by Vee Venski