Hong Kong Stock Investment Beginner's Guide: From Basic Knowledge to Selected Stocks

Why Hong Kong Stocks Have Become a New Opportunity for Taiwanese Investors

The Hong Kong securities market was established in 1891 and has a history of over 130 years. It is one of the most mature and strictly regulated markets globally. For Taiwanese investors, Hong Kong stocks not only represent a key gateway to international markets but also an important channel to participate in China’s and the global economic growth.

Geographical and Cultural Advantages are primary considerations for investing in Hong Kong stocks. Hong Kong, Macau, and Taiwan are all in East Asia, with nearly identical trading hours, smooth language communication, and highly interconnected economic systems. Compared to investing in European and American markets, which require dealing with time zone differences and cultural understanding barriers, Hong Kong stock investment clearly aligns better with Taiwanese investors’ routines.

Market Mechanism Superiority makes Hong Kong stocks particularly attractive. Hong Kong adopts a “T+0” trading system, allowing stocks purchased on the same day to be sold on the same day, greatly improving capital utilization efficiency compared to Taiwan stocks; additionally, Hong Kong stocks do not have daily price limit restrictions, providing broader profit potential. More importantly, Hong Kong stocks support two-way trading, enabling investors to go long or short, making risk management more flexible.

Liquidity and Investment Options should not be overlooked. As of the end of May 2025, the total market capitalization of Hong Kong stocks reached approximately US$5.2 trillion, with over 1,000 listed stocks, numerous public funds, and bonds, offering ample choices for investors. Since the Shanghai-Hong Kong Stock Connect was launched, continuous inflows of mainland China capital have injected strong trading volume and liquidity into the Hong Kong market.

Structure of the Hong Kong Market and Trading System Analysis

Hong Kong’s stock market is mainly divided into the Main Board and the Growth Enterprise Market (GEM). The Main Board features large-cap companies and blue-chip stocks, including Tencent, Alibaba, HSBC Holdings, and other market leaders; GEM is dedicated to supporting innovative and growth-oriented companies that do not yet meet Main Board listing requirements.

Based on stock nature, Hong Kong stocks can be categorized into three main types. Blue-chip stocks are companies included in the Hang Seng Index, usually market leaders with stable performance; H-shares refer to state-owned enterprises incorporated in China and listed in Hong Kong; Red chips are companies incorporated outside China but with actual business operations in China.

Trading Hours are from 9:30 AM to 12:00 PM and 1:00 PM to 4:00 PM Taiwan time, with a one-hour lunch break. The trading unit is “lot,” with the number of shares per lot set by the issuing company. Settlement follows the “T+2” system, meaning funds and stocks are settled on the second business day after the transaction date.

Index Systems include the Hang Seng Index, composed of the 50 largest companies by market value in Hong Kong, serving as the main indicator of overall market performance; the Hang Seng China Enterprises Index, focusing on Chinese-funded H-shares; and the Hang Seng Tech Index, tracking leading technology and internet companies in Hong Kong.

Key Differences Between Hong Kong Stocks and U.S. Stocks

Hong Kong stock trading rules are similar to those of U.S. stocks but still have important differences. U.S. stock trading hours span from Taiwan nighttime to early morning, covering multiple exchanges; Hong Kong trading hours are concentrated during Taiwan daytime, making it more convenient for domestic investors to participate.

The minimum trading unit for U.S. stocks is 1 share, while Hong Kong stocks are traded in lots. U.S. stocks have no dividend tax restrictions, whereas Hong Kong imposes a 10% dividend tax on non-Hong Kong residents; however, Taiwanese investors can reduce the tax rate to 21% by submitting a W-8BEN form.

In terms of industry composition, Hong Kong stocks are heavily weighted in finance, real estate, and technology (especially Chinese concept stocks), while U.S. stocks cover a broader range of industries such as technology, consumer, healthcare, and semiconductors. Both markets have no daily price limit restrictions. U.S. stocks are traded across multiple exchanges, whereas Hong Kong stocks are only traded on the Hong Kong Stock Exchange.

Selected Investment Targets in Hong Kong Stocks

Tencent Holdings: Leader in China’s Internet

Stock Code: 0700.HK

Anyone investing in Hong Kong stocks must pay attention to the company’s market cap leader—Tencent. Founded in 1998, Tencent is China’s top company in communications and social services, and the largest internet company in China. Its founders, Ma Huateng and Alibaba’s Jack Ma, are known as “Two Ma,” highlighting its pivotal role in China’s internet industry.

Tencent experienced a significant decline from its all-time high of HKD 775 in early 2021 due to regulatory tightening on gaming, fintech compliance pressures, and anti-monopoly investigations. However, by 2024, as policy environment stabilized, Tencent’s stock gradually rebounded. As of June 2025, the stock price remained in the HKD 400–450 range, with a P/E ratio of about 23, well below its five-year average, making it an attractive valuation.

With an irreplaceable social ecosystem, diversified revenue streams, and improved policy environment, Tencent remains one of the most stable long-term investment options.

BYD Co.: Global Leader in New Energy Vehicles

Stock Code: 1211.HK

BYD was established in 1995, initially focusing on battery manufacturing, and has transformed into a global leader in new energy vehicles. In 2024, its global sales reached 4.27 million units, surpassing Tesla to become the world’s top seller of new energy vehicles, ranking among the top four automotive brands worldwide.

Financially, BYD’s revenue in 2024 was approximately US$107 billion, a 29% increase year-over-year; net profit was RMB 40.25 billion, up 34%. The per-vehicle gross profit margin was about 21.02%, even higher than Tesla’s 17.9%, demonstrating its competitive advantage.

BYD is accelerating its international expansion by establishing production bases in multiple countries, which will help reduce production costs and expand market share, supporting future growth.

CNOOC Limited: Stable Energy Supply Pillar

Stock Code: 883.HK

CNOOC Limited is China’s largest offshore oil and natural gas producer. According to 2024 data, its crude oil production reached about 530 million barrels, and natural gas output was approximately 115 billion cubic meters, demonstrating stable production capacity.

The International Energy Agency forecasts that natural gas demand will grow at an average annual rate of 2% over the next decade, which is a long-term positive for CNOOC’s natural gas business. The company’s financial performance is relatively stable, providing investors with steady cash flow expectations.

However, investors should pay attention to potential impacts from global oil price fluctuations, environmental policies, and geopolitical risks between China and the U.S. As the world transitions to renewable energy, traditional energy companies face structural challenges.

Baidu Group: Pioneer in Artificial Intelligence and Cloud Computing

Stock Code: 9888.HK

Baidu, China’s largest search engine and AI technology company, achieved total revenue of about RMB 32.5 billion in the first quarter of 2025, a nearly 3% year-over-year increase. This growth mainly stems from rapid development in cloud computing and AI businesses.

Market research predicts that China’s cloud computing market will grow at an average annual rate of 30% in the coming years, with Baidu holding significant potential. Its autonomous driving platform “Apollo” has attracted cooperation from multiple automakers, opening new avenues for long-term growth.

Investors should be aware of increasing market competition and regulatory policy changes. The rise of emerging companies like ByteDance intensifies competition in advertising markets, and government regulation of tech firms may also influence strategic development.

Pop Mart: Emerging Star in Trendy Consumer Goods

Stock Code: 9992.HK

Pop Mart is famous for its original IPs and blind box products. Its popular IP Labubu has gone viral in recent years, with long queues at stores during new product launches. The company has over 500 stores and more than 2,000 smart vending machines worldwide, covering over 30 countries.

In Q1 2025, Pop Mart’s total revenue increased by 165% year-over-year, with overseas markets growing about 475%, making international expansion a key growth driver. JPMorgan predicts that the “The Monsters” series featuring Labubu could reach RMB 14 billion in sales by 2027.

Currently, Pop Mart remains in a high-growth phase, with overseas markets and high-end IP commercialization performing especially well. Long-term attention to its development trajectory is recommended.

Investment Channels for Taiwanese Investors in Hong Kong Stocks

Through Taiwanese Brokerage Firms via Custodian Trading

Open an account with a local Taiwanese securities firm to trade Hong Kong stocks directly. The advantage is trading in TWD directly, avoiding currency exchange fees. The downside is that it only allows long positions, with no leverage or short selling options, and higher transaction fees.

Through Hong Kong Brokerage Accounts

Popular Hong Kong brokers like Interactive Brokers, Futu NiuNiu, etc., offer low commission fees. The drawback is that funds must be deposited in HKD or USD; using USD incurs exchange rate costs. Leverage for direct Hong Kong stock trading is limited.

Trading via Contracts for Difference (CFD)

CFD allows traders to operate in both directions, going long or short. It supports margin trading, leveraging effects to open positions at low cost and amplify profits. Be aware that under leverage, both gains and losses are magnified.

Advantages include flexible long/short positions, leverage, a wide range of underlying assets (stocks and indices), and no currency exchange concerns. Disadvantages are that CFD platforms usually only offer large-cap stocks, with limited options for smaller market cap stocks and lower trading volumes.

Key Risk Management Points for Hong Kong Stock Investment

Platform selection is crucial. Different platforms vary greatly in risk alerts, capital protection, and signal quality. Choosing a reputable platform with strict risk warning mechanisms is the first step to protect your capital.

Set reasonable stop-loss points is especially important. Unlike Taiwan and mainland China markets with 10% daily price limits, Hong Kong stocks have no such restrictions, and price volatility can be much larger than expected. Investors should clearly set stop-loss levels when opening positions to avoid unexpected losses.

Diversify investments to avoid concentration risk. Spread funds across multiple stocks rather than concentrating on a single target. A light-weighted portfolio can effectively minimize asset risk and is a fundamental principle of prudent investing.

Overall Evaluation

Compared to the record highs of the Nikkei, the near-peak U.S. and Taiwan markets, Hong Kong stocks at current lows offer more value investment potential. Unless extremely pessimistic about China’s economic outlook, investing in these undervalued leading companies at current prices is a rare opportunity.

For investors who missed rebounds in multiple international markets, entering Hong Kong stocks can be a new strategic move. However, entering the Hong Kong market should be based on personal investment preferences and risk tolerance, choosing the right timing. The high volatility of Hong Kong stocks brings both risks and opportunities; success depends on whether investors can approach it with a professional mindset.