A Hong Kong Stock Exchange trading account enables the investor to use the Hong Kong dollar as a medium to buy and sell stocks listed on the exchange. As such, investors can trade based on their personal preferences rather than those of other markets.
There are several factors to consider before you can begin trading on an exchange, these include:
One will also need to consider their credit card since most brokers require you to settle accounts through a local bank. Also, some charge penalty fees if one cancels unsatisfied orders too early. Check with your broker on potential charges that come with opening and settling new accounts.
If you don’t have enough money at once, consider opening a margin account. This type of account lets you borrow money from your broker to make more significant purchases. Make sure that you are not over-leveraged since this could result in massive losses if the value of stocks suddenly drops.
Open a bank or brokerage account
Initially, open a bank or brokerage account. After which, one can start by opening a local securities trading account with any registered broker. When doing so, be aware of whether or not your broker offers online access to information on Hong Kong traded companies, the option to buy through cash accounts, trade on margin, and electronic trading. Some brokers may not offer all these services, so consider this when choosing a broker.
Start buying stocks
Once you’ve chosen the right stock-trading company, there are two main ways of buying stocks; cash accounts or margin accounts. This is important because, for some investors, their risk tolerance will determine which type of account they choose (if they do not already possess one).
For example, if one has 100 HKD in hand, then their risk level will be low enough to purchase stocks at face value through a cash account; however, if they end up borrowing 100 HKD from the bank to purchase more stocks than what they have on hand, then this would mean that they have to repay the loan with interest via a margin account.
Open a cash account
To open up a cash account, you’ll need at least 2,000 HKD to start investing. Their brokerage company will also require those willing to invest more than 100,000 HKD in presenting documentation that proves how much money is available for trading. Such investors tend to have an easier time buying and selling large amounts of stock than those who only own small amounts of capital.
Adhere to legal guidelines
By and large, present-day investors must adhere to strict legal guidelines. They must register themselves with the Securities and Futures Commission (SFC) to become a licensed client of any appropriate company. This is to prevent users from attempting to trade illegally on their own without considering the risks involved when doing so.
Establish long or short positions
As per market convention, establishing long or short positions are part of the standard operating protocol in buying and selling stocks through margin accounts. With that said, it is essential to remember that certain stockbrokers charge different rates for borrow fees depending on one’s trading history, and this is meant to help investors become more responsible.
Before signing up for an HK stock trading account, one must consider their current broker’s capabilities and international coverage. Doing so will make them aware of all they need to hold onto your stock. It’s important because starting with local companies’ shares may not yield enough dividends compared to investing in world-renowned firms.
It would also prove beneficial if you knew whether your chosen brokerage company was equipped with essential resources to buy and sell currencies, indices, derivatives, options, futures contracts, etc. We recommend using a reputable and experienced online broker from Saxo Bank to help you trade stocks in Hong Kong.