About the Hong Kong Stock Exchange (HKEX)
The Hong Kong Stock Exchange (SEHK) is also known as the Stock Exchange of Hong Kong and is the 3rd largest stock exchange in Asia. Only the Shanghai Stock Exchange and the Tokyo Stock Exchange sit above it. It is the sixth-largest stock exchange in the world.
It has been reported that the Hong Kong Stock Exchange is the fastest growing in Asia, and has become the top destination for local and international traders alike. Some of the top companies on the SEHK are from China, and the SEHK has links with both the Shanghai and Shenzhen Exchanges, which will be of interest to those looking to trade in those markets
On this page, you’ll find a brief history of the Stock Exchange of Hong Kong, along with information about the indices that track the exchange’s performance and the companies whose stocks are listed on the SEHK.
The first formal stock market in Hong Kong came into being in 1891 when the Association of Stockbrokers was established. It was later renamed in 1914, becoming known as the Hong Kong Stock Exchange.
A second stock exchange, The Hong Kong Stockbrokers’ Association, was incorporated in 1921, and in 1947, the two fully merged to become known as The Hong Kong Stock Exchange Ltd.
By 1972, there were four stock exchanges in existence in Hong Kong. These were the Far East Exchange, the Hong Kong Stock Exchange, the Kam Ngan Stock Exchange and the Kowloon Stock Exchange. It made sense fo these to become a unified stock exchange, and on the 7th of July, 1980, the Stock Exchange of Hong Kong (SEHK) was incorporated. This merger allowed the market to grow, and Hong Kong was then able to compete on an international scale.
The 1987 market crash led to reforms in the stock market, and in 1992, The Securities and Futures Commission (SFC) of Hong Kong was set up to regulate the securities and futures markets in the country, and to protect investors coming into the market. The market infrastructure was improved with the introduction of the Central Clearing and Settlement System in 1992 and the Automatic Order Matching and Execution System in 1993, and market rules and regulations have been undergoing continuous review ever since.
The main indices tracking the performance of the Stock Exchange of Hong Kong include:
- The Hang Seng Index. This monitors and records the changes of the 33 largest companies within the Hong Kong stock market.
- The Hang Seng Composite Index. This provides a broad standard for the overall performance of the stock market in Hong Kong.
- The FTSE/Xinhua China 25 Index. This index is also widely used and is used primarily to track the performances of Chinese red chip companies.
There are over 2,300 companies listed on the Hong Kong Stock Exchange, with a total market cap of HK$27.2 trillion, and an average daily turnover of around HK$74 billion.
The exchange has a variety of companies whose stocks are traded every day. A significantly large number of companies listed on the Hong Kong Stock Exchange come from the financial, technology, oil & gas, and property sectors, alongside those that come from the construction, IT, and consumer goods industries.
One of the largest companies listed on the Hong Kong Stock Exchange is the banking and financial institution, HSBC plc, with over 30% of the value of the Hang Seng Index. Other leading companies include Microsoft, China Mobile, Intel and Cisco.
The Stock Exchange of Hong Kong offers many great opportunities for investors looking to access the Chinese Stock Market, especially with the diversity offered by the Shanghai and Shenzen connections. Being the sixth-largest stock exchange (in terms of market cap) in the world, it has become a popular choice for many investors.
Despite the heavy-weight towards the financial, banking, and property sectors, there are plenty of other avenues for those investors looking to diversify their portfolios. The Hang Seng Index is one of the most widely followed equity indexes the world over, which can offer peace of mind to those investing in the Chinese market.