Hong Kong Stock Exchange facts for kids

The Stock Exchange of Hong Kong (also known as Hong Kong Stock Exchange or SEHK) is a very important place in Hong Kong where people buy and sell parts of companies. It's like a big marketplace for shares! It is one of the biggest stock exchanges in Asia and ranks among the top 10 globally based on the total value of all companies listed there.

This exchange helps connect international investors with companies from mainland China. It's a key place for companies to raise money. Unlike other exchanges in mainland China, the Hong Kong Stock Exchange has its own rules. These rules make it easier for people from other countries to invest.

The Stock Exchange of Hong Kong is owned by a company called Hong Kong Exchanges and Clearing Limited (HKEX). HKEX is a huge company itself and is also listed on this very exchange. In 2021, HKEX became the largest stock exchange operator in the world by its own market value. A survey in 2021 showed that about 57% of adults in Hong Kong had invested money in the stock market. The old physical trading floor, where people used to shout orders, closed in October 2017 because most trading is now done electronically.

History of the Hong Kong Stock Exchange

The idea of a stock market in Hong Kong started way back in 1866. But the official stock market began in 1891. It was first called the Association of Stockbrokers in Hong Kong. This group was formed to help make rules and stop unfair trading. It was later renamed The Hong Kong Stock Exchange in 1914.

By 1972, there were four different stock exchanges in Hong Kong. People thought it would be better to have just one big exchange. So, the Stock Exchange of Hong Kong Limited was created in 1980. Trading officially started on this new, combined exchange on April 2, 1986.

After a big market crash in 1987, people realized the market needed better rules. This led to many important changes. For example, the Securities and Futures Commission (SFC) was set up in 1989. This group became the main watchdog for the stock market.

The way the market worked also got much better. New computer systems were introduced, like the Central Clearing and Settlement System (CCASS) in 1992. This system made it easier and safer to complete trades. Another system, the Automatic Order Matching and Execution System (AMS), came out in 1993. This helped match buyers and sellers quickly. Over the years, these systems have been updated to make trading even faster and smoother.

The rules for companies wanting to list on the exchange also became clearer. New rules were added to help the market grow and protect investors. For example, in 1993, Tsingtao Brewery became the first company from mainland China to list its shares (called H shares) on the Hong Kong exchange. This was a big step! In 1999, the Growth Enterprise Market (GEM) was launched. This market helps smaller, growing companies raise money.

In 1999, the Hong Kong Stock Exchange, the Hong Kong Futures Exchange, and their clearinghouses all joined together. They formed a new company called Hong Kong Exchanges and Clearing Limited (HKEX). HKEX then became the main company that owns and runs these exchanges.

Key Moments in History

• On April 2, 1986, a new trading hall opened. At that time, 249 companies were listed.
• In October 1987, the Stock Exchange closed for four days during a big global stock market crash. This was done to try and stop more losses.
• In 1992, the Central Clearing and Settlement System (CCASS) was introduced to make trading easier.
• On July 15, 1993, Tsingtao Brewery became the first Chinese company to list its shares on the exchange.
• In 1993, the Automatic Order Matching and Execution System (AMS/1) was launched for faster trading.
• On November 12, 1999, the Tracker Fund of Hong Kong was listed. This fund was created by the government after the 1997 Asian financial crisis.
• On November 25, 1999, the new Growth Enterprise Market (GEM) started with two companies listed.
• On March 6, 2000, the Stock Exchange, Futures Exchange, and Hong Kong Securities Clearing Company all became part of HKEX. HKEX itself was listed on the exchange on June 27, 2000.
• On October 27, 2017, the physical trading floor was closed. Almost all trading is now done electronically. The old trading hall was turned into a space for conferences and events.
• On July 19, 2023, a new system was launched. It allows investors to trade shares using both Hong Kong Dollars (HKD) and Chinese Yuan (RMB). This makes it easier for people to use RMB to buy shares.

Trading Hours

Russian President Dmitry Medvedev with exchange Chairman Ronald Arculli during a visit to Hong Kong in 2011

The trading day at the Hong Kong Stock Exchange has different parts:

• Pre-opening auction: From 9:00 am to 9:30 am. This is when orders are collected to decide the opening price.
• Morning trading: From 9:30 am to 12:00 pm. This is the main trading session.
• Lunch break: From 12:00 pm to 1:00 pm. During this time, trading stops for most shares.
• Afternoon trading: From 1:00 pm to 4:00 pm. This is the second main trading session.

The closing price of a stock is calculated from several price checks taken between 3:59 pm and 4:00 pm.

Over the years, the trading hours have changed to match other major exchanges, especially those in mainland China. For example, the long two-hour lunch break was shortened in phases. On March 7, 2011, the lunch break was cut to 90 minutes. Then, on March 5, 2012, it was shortened again to just 60 minutes. This means the afternoon session now starts earlier, at 1:00 pm.

Electronic Trading

The Hong Kong Stock Exchange started using computers for trading on April 2, 1986. In 1993, they launched the "Automatic Order Matching and Execution System" (AMS). This system helped match buyers and sellers automatically. It was later updated to a newer version in October 2000. Today, almost all trading is done electronically, which is much faster and more efficient than the old physical trading floor.

How the Exchange is Regulated

The Stock Exchange of Hong Kong has a role in regulating, or overseeing, the companies that list on it. However, some people, like David Webb, who was a director of the exchange, have suggested that a separate, independent group should be in charge of regulation. They believe this would avoid any conflicts of interest, as the exchange also has its own business goals.

Largest Companies by Market Value

Here are some of the largest companies listed on the Hong Kong Stock Exchange, based on their total market value (how much all their shares are worth combined). This data was from February 14, 2018.

• Tencent Holdings
• Industrial and Commercial Bank of China
• China Construction Bank
• Bank of China
• PetroChina
• Agricultural Bank of China
• HSBC Holdings
• Ping An Insurance
• China Mobile
• China Merchants Bank
• Bank of Communications
• China Life Insurance Company
• Postal Savings Bank of China
• China National Offshore Oil Corporation
• China Minsheng Bank
• BOC Hong Kong (Holdings)
• China Pacific Insurance Company
• CK Hutchison Holdings
• CITIC Bank International

See also

In Spanish: Bolsa de Hong Kong para niños

• A-share (mainland China)
• Shanghai Stock Exchange
• Shenzhen Stock Exchange
• H share
• Hang Seng Index
• Leading stock
• List of East Asian stock exchanges
• Stock disasters in Hong Kong

Images for kids

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  The now-defunct floor trading lobby in 2007