Stock Exchange of Hong Kong

The Stock Exchange of Hong Kong was established in 1891. Today, the exchange is primarily driven by the country’s highly respected and sophisticated financial services industry. Hong Kong has an intimate relationship and trading partnership with China; its exports to that country alone top $300 billion annually, which amounts to nearly 60% of Hong Kong’s total exports. The exchange mimics that pattern, with Chinese companies making up more than half of the stocks trading there.

Hong Kong operates as a “special administrative region” created by the central Chinese government to allow the small nation to operate basically the same way it had under the former British rule. For investors, this distinction is crucial, because the Stock Exchange of Hong Kong operates with autonomy in a capitalist country that is governed by a limited democracy (as opposed to China’s communist government and socialist economy).

During the late 1990s, this exchange was able to start listing H-shares of large Chinese state-owned companies (the H-share designation simply indicates Chinese stocks traded on the Stock Exchange of Hong Kong, in Hong Kong dollars). This is actually the largest market for Chinese equity securities. Today, the stock of nearly 600 companies based on mainland China can be traded on the Hong Kong exchange.

The most important index connected to the Hong Kong exchange is known as the Hang Seng. This market cap-weighted index includes the forty biggest corporations traded on the exchange.

Cross-Boundary Trading

Shanghai-Hong Kong Stock Connect was launched in November 2014 to make it easier for cross-boundary trading between Shanghai and Hong Kong. This development let international investors have more access to the Chinese stock market than ever before.Companies trading on the Stock Exchange of Hong Kong include Bank of East Asia, Air China, and Hong Kong Television Network.