HK Stock – Overview

Hong Kong Stock – Overview

The Stock Exchange of Hong Kong Limited (SEHK) is Asia’s third-largest stock exchange in terms of market capitalization behind the Tokyo Stock Exchange and Shanghai Stock Exchange, and the sixth largest in the world before Euronext. SEHK had more than 2,000 listed companies, over half of it of which are from mainland China (Red chip, H share and P chip), around 45% from Hong Kong and 5% from other countries and region (e.g. Macau, Taiwan, Malaysia, United States, Singapore, etc.)

The Hong Kong securities market can be traced back to 1866, but the stock market was formally set up in 1891, when the Association of Stockbrokers in Hong Kong was established. It was renamed The Hong Kong Stock Exchange in 1914. By 1972, Hong Kong had four stock exchanges in operation. There were subsequently calls for the formation of a unified stock exchange. The Stock Exchange of Hong Kong Limited (the Exchange) was incorporated in 1980 and trading on the Exchange finally commenced on 2 April 1986. Since 1986, a number of major developments have taken place. The 1987 market crash revealed flaws in the market and led to calls for a complete reform of the Hong Kong securities industry. This led to significant regulatory changes and infrastructural developments. As a result, the Securities and Futures Commission (SFC) was set up in 1989 as the single statutory securities market regulator.

The market infrastructure was much improved with the introduction by the Exchange of the Central Clearing and Settlement System (CCASS) in June 1992 and the Automatic Order Matching and Execution System (AMS) in November 1993. Since then, the framework of market rules and regulations, both Exchange-administered or otherwise, have been undergoing continuing review and revision to meet changing market needs while ensuring effective market regulation. In respect of market and product development, there are the listing of the first derivative warrant in February 1988, the listing of the first China-incorporated enterprise (H share) in July 1993; and the introduction of regulated short selling in January 1994 and stock options in September 1995. Furthermore, the Exchange introduced the Growth Enterprise Market (GEM) in November 1999 to provide fund raising opportunities for growth companies of all sizes from all industries, and to promote the development of technology industries in the region.

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