What is the Hong Kong Stock Exchange, and what does it do?

As a member of the HKEX Group, the Hong Kong Stock Exchange (HKG) is included as one of the world’s largest stock exchanges. It has long been used to raise capital for Hong Kong and Mainland China companies.

The HKG is one of the world’s most important securities markets by market capitalisation. It dates back to China’s first formal stock exchange, the Association of Stockbrokers in Hong Kong, founded in 1891.

In 1931, they established a second market, and in 1947 they combined the two to form the Hong Kong Stock Exchange.

The exchange opened automated ordering in 1993 and stock option trading in 1995. In 2000, Hong Kong Exchanges and Clearing Ltd., a publicly-listed firm, was formed by the Hong Kong Futures Exchange merger and the Hong Kong Securities Clearing Company. The stock market discontinued its physical trading floor in 2017, owing to the predominance of electronic trading.

It is the world’s seventh-largest stock exchange by market capitalisation, with a market capitalisation of over $3.8 trillion as of November 2020. With nearly 2,500 listed firms at the end of November 2020, up from 1,200 in 2008, it is one of Asia’s largest markets. As of November 2020, the aggregate market capitalisation of enterprises listed on the exchange was about HK$45.5 trillion.

The minimum market capitalisation for a listing was HK$500 million, and the minimum value of a public float was HK$125 million. It raised these minimum amounts in 2017 to strengthen trading liquidity for market participants and enhance the quality of the exchange’s listed issuers.

The China Construction Bank, the Industrial & Commercial Bank of China, Bank of China, and Ping An Insurance are among the top-valued firms on the Mainland Chinese market.

However, as of November 2020, Tencent Holdings, the Chinese internet business conglomerate, has taken the top spot.

Growth in options trading

Options trading is rising in Hong Kong as investors look for new and innovative ways to generate returns.

The high degree of flexibility offered by options trading is one of the main reasons for its growth in Hong Kong. It can also be used to hedge or speculate on a wide range of investment opportunities. They can use options to protect against downside risk, take advantage of price movements, or create income streams through covered calls and write strategies.

Hong Kong’sKong’s options market is also attractive because of its low costs and liquidity. Trading costs are low, and many products are available, including vanilla options, barrier options, and Asian options. Liquidity is also good, with ample supply and demand for most products.

Another reason for the growth of options trading in Hong Kong is the increasing number of available online platforms. These platforms make it easy to trade options online and provide various tools and resources to help investors make informed decisions.

Options trading is becoming increasingly popular in Hong Kong as investors seek new and innovative ways to generate returns. The options market is still relatively small, but it is multiplying as investors become more sophisticated and knowledgeable about the products available.

What is driving this growth?

There are several factors at work:

1. Options offer investors a means to hedge their portfolios against downside risk while preserving the potential for upside profits.
2. Options trading is becoming increasingly popular with retail investors, who appreciate the flexibility and liquidity of the market.
3. Technological advances make it easier for traders to access options products and trade them electronically.

All these factors have helped to make options trading one of the most popular investment products in Hong Kong.

In a volatile market, options can provide investors with protection and downside risk management while still allowing them to participate in any upside potential.

For more information, link to Saxo and visit their website.