Hong Kong Stock Investment Beginner's Guide: Why Now Is a Good Time to Focus on the Hong Kong Stock Market

For Taiwanese investors, the Hong Kong stock market not only represents a bridge to investing in Asia but also serves as a key channel for participating in the global markets. This article will delve into the market characteristics and trading mechanisms of Hong Kong stocks, provide detailed comparisons with US stocks, and highlight high-quality targets worth attention for readers. It will also share how Taiwanese investors can effectively access the Hong Kong stock market.

Where Does the Investment Appeal of Hong Kong Stocks Come From?

Historical Heritage and Regulatory Maturity

Hong Kong’s financial market development dates back to 1866, over 160 years ago. The Hong Kong Stock Exchange was established in 1891, and after multiple consolidations, it unified into the Hong Kong Exchanges and Clearing Limited (HKEX) in 1986. HKEX completed restructuring and went public in 2000, becoming one of Asia’s most regulated securities markets. Over more than a century, Hong Kong has built a world-class market regulation system and trading rules, with transparency and fairness ranking among the top globally. This is the core reason why capital continues to flow into Hong Kong stocks.

Geographical Advantages and Cultural Proximity

Unlike US and European markets, Hong Kong stocks operate in the same time zone as Taiwan, with high overlap in trading hours, eliminating the need to deal with time zone differences. Language barriers are minimal, policy environments are similar, and economic linkages are close, making it easier for Taiwanese investors to grasp Hong Kong market dynamics and logic. Compared to distant European and American markets, the learning curve and risks for Hong Kong stocks are lower.

Market Depth and Trading Flexibility

As of the end of May 2025, Hong Kong stocks have a total market capitalization of about US$5.2 trillion, with over 1,000 stocks, numerous funds, bonds, and other investment products. Notably, Hong Kong stocks implement T+0 trading (buy and sell on the same day) without daily price limit restrictions. Compared to Taiwan’s 10% limit, Hong Kong stocks have greater volatility, which brings both risks and opportunities. Additionally, Hong Kong stocks support two-way trading—investors can go long or short—providing more strategic options for professional traders.

Capital Vitality and Liquidity Support

Since the launch of the Shanghai-Hong Kong Stock Connect, mainland Chinese funds have continuously flowed into Hong Kong markets, injecting strong trading volume and liquidity. This cross-border capital flow reflects Hong Kong stocks’ attractiveness and ensures market activity.

Structure and Index System of the Hong Kong Market

Hong Kong stocks are divided into the Main Board and the Growth Enterprise Market (GEM). The Main Board features large-cap companies like Tencent, Alibaba, HSBC, with large market caps and high liquidity; GEM gathers small- and medium-sized innovative companies with higher volatility.

Based on market attributes, Hong Kong stocks mainly include three categories:

Blue Chips — Constituent stocks of the Hang Seng Index, representing leading companies with stable performance and good reputation.

H-shares — Chinese state-owned enterprises incorporated in China but listed in Hong Kong.

Red Chips — Companies incorporated outside Hong Kong but with actual business rooted in China.

Hong Kong stock trading is measured in “lots” (the number of shares per lot varies by company, commonly 100 shares). Trading hours are 09:30-12:00 and 13:00-16:00 Taiwan time, with a one-hour midday break. Settlement cycle is T+2, meaning settlement occurs two business days after the trade.

In terms of indices, the Hang Seng Index (HSI) comprises the 50 largest companies and reflects overall market performance; the Hang Seng China Enterprises Index (HSCEI) focuses on Chinese H-shares; the Hang Seng TECH Index (HSTECH) concentrates on technology and internet companies, serving as an important indicator of the tech sector in Hong Kong.

Key Differences Between Hong Kong Stocks and US Stocks

The core differences lie in trading hours, minimum trading units, and dividend tax. Overall, the trading rules are similar. Compared to US stocks, Hong Kong stocks’ trading hours better align with Taiwanese investors’ routines, making participation easier.

List of Hong Kong Stocks Worth Tracking

After screening over 2 trillion HKD in market cap across 15 companies, based on industry outlook, corporate position, and historical performance, the following are currently noteworthy:

Tencent Holdings (0700.HK)

As the largest company by market cap on HKEX, Tencent experienced a significant rebound in 2024. Founded in 1998, it is a leading communication and social platform giant, holding a pivotal position in China’s internet ecosystem. In 2021, due to gaming regulation, fintech compliance, and other pressures, its stock price fell from a high of HKD 775. Now (June 2025), it trades around HKD 400-450, with a P/E ratio of about 23, below its five-year average, making valuation attractive. Tencent’s irreplaceable social ecosystem, diversified revenue streams, and improving policy environment make it a stable long-term investment choice.

BYD Company (1211.HK)

Founded in 1995, BYD has transformed into a global leader in new energy vehicles. In 2024, its global vehicle sales reached 4.27 million units, surpassing Tesla to become the world’s top seller of new energy vehicles, ranking fourth globally in car brand sales. Financially, revenue in 2024 was approximately US$107 billion, up 29% YoY; net profit was RMB 40.25 billion, up 34%. Notably, its per-vehicle gross margin reached 21.02%, higher than Tesla’s 17.9%, reflecting cost control and pricing power. Its international expansion is advancing with new production bases, further reducing costs and expanding market share.

CNOOC Limited (0883.HK)

As China’s largest offshore oil and natural gas producer, CNOOC’s 2024 crude oil output was about 530 million barrels, and natural gas output about 115 billion cubic meters. According to IEA forecasts, global natural gas demand is expected to grow at an average annual rate of 2% over the next decade, supporting its natural gas business. The company’s financial performance remains relatively stable, offering long-term investment value. Investors should be cautious of global oil price fluctuations, environmental policies tightening, and geopolitical risks impacting operations.

Baidu Group (9888.HK)

As China’s largest search engine and AI enterprise, Baidu achieved revenue of about RMB 32.5 billion in Q1 2025, with nearly 3% YoY growth, driven mainly by cloud computing and AI expansion. China’s cloud market is expected to grow at an average annual rate of 30%, and Baidu’s deployment in this field provides new growth engines. Its autonomous driving platform “Apollo” attracts collaborations with automakers, indicating promising commercialization prospects. Risks include intensified competition in advertising and regulatory changes.

Pop Mart (9992.HK)

Pop Mart leads China’s trendy toy industry with original IP and blind box models. Its “Labubu” IP became popular recently, with new product launches in high demand. It has over 500 stores and 2,000 Robo-Shops across more than 30 countries. In Q1 2025, revenue grew 165% YoY, with overseas markets up 475%, demonstrating strong international expansion. JPMorgan projects that the “THE MONSTERS” series featuring Labubu could reach RMB 14 billion in sales by 2027, with significant growth potential.

Other noteworthy targets include Alibaba, HSBC, China Mobile, China Construction Bank, Meituan, Xiaomi, each with industry advantages and valuation features.

Three Pathways for Taiwanese Investors to Enter Hong Kong Stocks

Via Discretionary Trust Channels

Open accounts with local Taiwanese securities firms to trade Hong Kong stocks directly in TWD. Advantages include direct TWD trading; disadvantages are only long positions possible, no leverage or shorting, and relatively higher fees.

Hong Kong Brokerage Accounts

Using brokers like Interactive Brokers, Futu, etc., offers low commissions. However, currency exchange is required, and if funding in USD, exchange rate risk exists. Leverage on Hong Kong stocks is limited.

CFD Trading

Contracts for Difference (CFD) allow two-way trading, margin trading, and leverage, with lower trading costs and no currency exchange issues. The downside is that platforms typically focus on large-cap stocks, with difficulty trading small-cap or low-liquidity stocks. Compared to the previous two methods, CFDs offer higher flexibility, especially suitable for swing traders.

Key Risk Management Points for Hong Kong Stock Investment

Choosing a Reliable Trading Platform Is Crucial

Platform security and risk control directly impact investment outcomes. A good platform should have comprehensive alert systems to protect investor capital at all times.

Set Reasonable Stop-Losses

Hong Kong stocks have no daily price limit, so large intraday declines are possible. Investors must develop the habit of setting stop-loss orders within reasonable ranges to prevent unexpected large losses.

Diversify Funds and Balance Risks

Avoid heavy concentration in a single stock. Distribute capital across different industries and styles, adopting a light position strategy to mitigate risk. This is fundamental for all investors.

Summary and Outlook

Compared to the Nikkei reaching new highs this year, US and Taiwan markets near historical peaks, Hong Kong stocks remain relatively undervalued, with clear value investment appeal. Unless investors hold an extremely pessimistic view of China’s economic prospects, the current valuation levels are rare opportunities for deploying capital into quality leading companies.

Hong Kong stocks’ high volatility brings both risks and opportunities. The key lies in whether investors possess sufficient risk awareness and psychological resilience. It is recommended that investors choose appropriate entry points and trading methods based on their investment preferences, risk tolerance, and time horizon, to rationally seize the opportunities that Hong Kong stocks may offer.