Hong Kong Stock Exchange facts for kids

The Stock Exchange of Hong Kong (often called SEHK or the Hong Kong Stock Exchange) is a very important stock exchange located in Hong Kong. It's a place where people can buy and sell parts of companies, called shares or stocks.

By the end of 2020, there were 2,538 companies listed on this exchange. Together, these companies were worth about HK$47 trillion. This makes it one of the biggest and fastest-growing stock exchanges in Asia!

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. In 2021, it became the largest stock exchange operator in the world based on its total 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 out orders, was closed in October 2017. Now, almost all trading happens electronically.

History of the Hong Kong Stock Exchange

The idea of a stock market in Hong Kong goes all the way back to 1866. However, the official stock market started in 1891. It was first called the Association of Stockbrokers in Hong Kong. Later, in 1914, it was renamed The Hong Kong Stock Exchange.

By 1972, there were actually four different stock exchanges operating in Hong Kong. People soon realized it would be better to have just one big exchange. So, The Stock Exchange of Hong Kong Limited was created in 1980. Trading officially began on this new, unified exchange on April 2, 1986.

After 1986, many big changes happened. A major market crash in 1987 showed that the system needed improvements. This led to new rules and better ways of working. For example, the Securities and Futures Commission (SFC) was set up in 1989. This group became the main regulator for the stock market.

The way the market worked also got much better. In 1992, the exchange introduced the Central Clearing and Settlement System (CCASS). This system helps to make sure that trades are completed smoothly. Then, in 1993, the Automatic Order Matching and Execution System (AMS) was launched. This system helped match buyers and sellers faster.

The rules for companies wanting to list their shares became clearer. New rules were also added to help the market grow and protect investors. The trading system kept improving, allowing brokers to trade from their own offices. A new, faster trading system, AMS/3, was launched in 2000.

The exchange also started offering new ways to invest. In 1988, the first "derivative warrant" was listed. In 1993, Tsingtao Brewery became the first company from mainland China to list its shares in Hong Kong. The exchange also introduced "short selling" in 1994 and "stock options" in 1995.

In 1999, the exchange created the Growth Enterprise Market (GEM). This market helps smaller, growing companies raise money. It also helps new technology companies in the region.

In March 1999, a big reform plan was announced. The Stock Exchange, the Hong Kong Futures Exchange, and their clearinghouses all joined together. They formed a new main company called Hong Kong Exchanges and Clearing Limited.

Key Moments in History

• April 2, 1986: A new trading hall opened. At this time, 249 companies were listed. Their total value was HK$245 billion.
• October 1987: The Stock Exchange closed for four days. This was an attempt to stop big losses during the "Black Monday" global stock market crash.
• June 24, 1992: The Central Clearing and Settlement System (CCASS) was introduced. This system helps clear and settle trades.
• July 15, 1993: Tsingtao Brewery became the first company from mainland China to list its shares on the exchange.
• November 1, 1993: The first "Automatic Order Matching and Execution System" (AMS/1) was launched. This system helped match buy and sell orders.
• November 12, 1999: The Tracker Fund of Hong Kong was listed. This fund was created by the government after the 1997 Asian financial crisis.
• November 25, 1999: The new Growth Enterprise Market (GEM) opened, with two companies listed on it.
• March 6, 2000: The Stock Exchange, Futures Exchange, and Hong Kong Securities Clearing Company all became part of HKEx. HKEx itself was then listed on June 27, 2000.
• October 27, 2017: The physical trading floor was closed. This was because most trading had moved to computers. The old trading hall is now being turned into a museum and event space.
• July 19, 2023: The Hong Kong Dollar (HKD) and Renminbi (RMB) Dual Counter Model was launched. This allows investors to trade shares using either currency.

How Trading Hours Work

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 a few parts:

• Pre-opening auction: This happens from 9:00 am to 9:30 am. During this time, investors can place orders, but no trades happen yet. The opening price for a stock is set shortly after 9:20 am.
• Morning trading: This session runs from 9:30 am to 12:00 pm. This is when most of the trading happens.
• Extended morning session (lunch break): From 12:00 pm to 1:00 pm, it's mostly a lunch break. Only a few specific types of investments can be traded during this hour.
• Afternoon trading: This session goes from 1:00 pm to 4:00 pm.

The closing price of a stock is decided by looking at five different prices taken between 3:59 pm and 4:00 pm.

In 2008, the exchange tried a "closing auction session" at the end of the day. However, this caused big changes in stock prices and concerns about unfair practices. So, they removed it in March 2009.

Before 2011, the lunch break was two hours long. This was one of the longest breaks among major stock exchanges. After some discussions, the exchange decided to shorten the lunch break. 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 change helped bring Hong Kong's trading hours more in line with other markets, like those in mainland China.

Electronic Trading

The Hong Kong Stock Exchange first started using computers for trading on April 2, 1986. This was a big step forward! In 1993, they launched the "Automatic Order Matching and Execution System" (AMS). This system helped match buyers and sellers quickly. Later, in October 2000, an even newer and faster system, AMS/3, was put in place. Today, almost all trading is done electronically.

Who Regulates the Exchange?

The Stock Exchange of Hong Kong has a special role. It is a business that wants to make money, but it also helps regulate (or oversee) the market. Some people believe there might be a conflict when the same organization tries to do both. They suggest that a separate, independent group should be the main regulator to make sure everything is fair for investors.

Largest Companies by Value

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

1. Tencent Holdings: HK$4,118.93 billion
2. Industrial and Commercial Bank of China: HK$2,877.98 billion
3. China Construction Bank: HK$2,167.39 billion
4. Bank of China: HK$1,803.12 billion
5. PetroChina: HK$1,715.53 billion
6. Agricultural Bank of China: HK$1,641.43 billion
7. HSBC Holdings: HK$1,629.79 billion
8. Ping An Insurance: HK$1,547.81 billion
9. China Mobile: HK$1,509.04 billion
10. China Merchants Bank: HK$991.75 billion
11. Bank of Communications: HK$985.55 billion
12. China Life Insurance Company: HK$844.57 billion
13. Postal Savings Bank of China: HK$676.41 billion
14. China National Offshore Oil Corporation: HK$492.91 billion
15. China Minsheng Bank: HK$420.11 billion
16. BOC Hong Kong (Holdings): HK$412.34 billion
17. China Pacific Insurance Company: HK$404.37 billion
18. CK Hutchison Holdings: HK$377.47 billion
19. CITIC Bank International: HK$367.82 billion

Images for kids

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