How to Invest in the Hong Kong Stock Market

The Hong Kong stock market is considered one of the world's key indexes, and it also represents an easier path for Western investors looking to put some money into up-and-coming Chinese companies. Officially known as the Hong Kong Stock Exchange, the market consistently ranks among the top 10 in the world in terms of market capitalization.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Licensed stockbroker (recommended)
• Capital to invest
• Knowledge of international investing

1. Do your research. Spend some time getting to know the movers and shakers on the Hong Kong Stock Exchange and the trends that currently define the marketplace. Remember that the performance of a few key companies is enough to send the entire market up or down.
2. Read up on your local Hong Kong and Chinese current events and business news. The smart investor knows that politics plays a very important role in the direction a country's stock market takes, especially in a transitional economy like China's.
3. Differentiate the two major Hong Kong stock markets. Understand that the Stock Exchange of Hong Kong Limited is a conglomerate of four exchanges that merged in the 1980s and is the primary market for securities trading in Hong Kong. The Hong Kong Enterprise Growth Market (GEM) is a speculative market in which up-and-coming companies that don't qualify for the regular stock exchange can attract investor attention.
4. Study the exchange. Decide on an industry you'd like to invest in, and look for a company that suits your risk tolerance in addition to offering an attractive profit potential.
5. Contact a licensed stockbroker, ideally one you've been doing business with for some time. Laws governing foreign investment in the Hong Kong Stock Exchange are complex, with considerable gray area. Ask your stockbroker whether he is permitted by law to invest in the Hong Kong Stock Exchange on your behalf.
6. Seek a licensed professional from the Chinese business community in a major city. Set up a trading account through the professional's institution, and have her invest in the Hong Kong Stock Exchange on your behalf. Remember that it can be difficult to track the Hong Kong Stock Exchange in real time, thanks to the considerable time difference between Hong Kong and the continental United States.

Tips & Warnings

• Head directly to the Hong Kong Exchanges and Clearing Limited homepage to get started using the Information Service Center.
• Buyer beware. It is difficult for the Hong Kong Securities Regulatory Commission (HKSRC) to detect illegal activity. Overseas investing comes with more inherent risk than investing in domestic stock markets.