History of the Hong Kong Stock Exchange

The Hong Kong Stock Exchange has been around almost as long as the modern version of the city, dating back nearly a century and a half to the beginning of British governance in the region. Its main index, the Hang Seng, is known and monitored internationally.

Significance

Also known as the HKSE or HKEx, it's one of the major stock exchanges in the world, and Asia's second largest. This made the Hang Seng a crucial index and the Hong Kong dollar an important currency. Hong Kong benefited from the exchange, which has been a front for mainland China's growth in recent decades. Many of the largest initial public offerings (IPOs) ever have taken place at the HKSE as a result of Chinese companies listing there.

History: Early Start

Formal founding occurred in 1891, although a few other exchanges coexisted with the HKSE until as late as 1986. Even with these other markets working in tandem, the HKSE dominated. The current name dates back to 1914.

History: Growth

The HKSE merged with the competing Hong Kong Stockbrokers Association in 1947. In the 1960s and 1970s, further mergers occurred with the Far East Exchange, Kam Ngan Stock Exchange and Kowloon Stock Exchange.

History: Modern Founding

In 1980, the Hong Kong government expedited the incorporation of the HKSE to comply with regulations and antitrust rules. The final expansion was in March 1986, when all other Hong Kong stock markets were merged into the bigger HKSE and a computerized information-sharing system was developed.

Function

The HKSE is a full exchange, listing securities and also derivatives since 1976. Hedge funds began trading there in 2002. In 2008 the market capitalized over HK$10.2 trillion.

Considerations

Due to British influence, the HKSE upholds liberal market traditions, with regulation and transparency similar to most Western markets. This contrasts with markets in mainland China, which are often perceived as less reliable. Consequently, the HKSE became a gateway to investment in China and a preferred location for listed mainland Chinese companies.

References

• Official History of the HKSE
• 2008 Fact Book
• HKSE Timeline