Hong Kong Stock Investment Guide: Start Building Your Portfolio in the Asian Market with These Top-Performing Stocks

For Taiwanese investors, Hong Kong stocks are not only a convenient gateway to the international capital markets but also a strategic window to participate in China’s and the global economic growth. This article will start from the current state of the Hong Kong stock market, analyze its trading system in detail, benchmark it against international markets, select Hong Kong stocks with investment value, and guide Taiwanese investors on how to effectively allocate their portfolios in Hong Kong stocks.

Unique Advantages and Investment Value of the Hong Kong Stock Market

Market Maturity and Regulatory Norms as the Foundation

The development history of the Hong Kong securities market dates back to 1866, with the first formal exchange established in 1891. After more than 150 years of evolution, it has become one of the most regulated and mature markets globally. Compared to other Asian markets, HKEX has established strict regulatory systems and transparent trading mechanisms, creating a highly fair trading environment for investors. This institutional guarantee allows both global institutional and individual investors to participate with confidence.

Geographical Advantages and Synergistic Effects of Systems

Hong Kong, Macau, and Taiwan are located in East Asia, with almost no time difference in trading hours and zero language barriers, which is a significant advantage over European and American markets. The economic ties among these three regions are increasingly close, making policy directions, industrial trends, and financial market changes easier to grasp. Compared to investing in US stocks, which requires dealing with time zone differences, language barriers, and complex policy understanding, Hong Kong stock investment has clear advantages in “timing, location, and human harmony.”

Leading Diversity of Investment Products

HKEX lists over 1,000 companies, along with a variety of products such as public funds and bonds, providing investors with ample choices. Whether blue-chip giants or growth-oriented enterprises, the Hong Kong stock market can meet different risk preferences.

Two-way Capital Flows and Ample Liquidity

Since the launch of Shanghai-Hong Kong Stock Connect, mainland and Hong Kong investors can mutually allocate assets in each other’s markets. Continuous northbound funds inject sufficient trading volume and market depth into Hong Kong stocks, providing individual investors with a better liquidity environment.

T+0 Trading System and Two-way Operation Space

Hong Kong stocks operate on a T+0 system, allowing same-day buying and selling, which enhances trading flexibility. More importantly, Hong Kong stocks permit short selling without limit-up restrictions, enabling investors to seek profits in both rising and falling markets. The profit potential is much broader compared to Taiwan stocks and A-shares.

Structure and Trading Mechanism of the Hong Kong Stock Market

HKEX has undergone a century of evolution, merging multiple exchanges in 1986, and completing restructuring and listing in 2000, becoming the sole official trading platform for Hong Kong stocks.

As of the first half of 2025, the total market capitalization of Hong Kong stocks is approximately US$5.2 trillion, occupying an important position in global capital markets. The market mainly divides into the Main Board and the Growth Enterprise Market (GEM): the Main Board includes high market cap and high trading volume companies like Tencent, Alibaba, HSBC, representing the core strength; GEM mainly features small and medium-sized innovative companies with more volatility.

Based on market classification, Hong Kong stocks are divided into blue chips (Hang Seng Index components, representing large quality enterprises), H-shares (Mainland Chinese companies listed in Hong Kong), and Red Chips (companies incorporated outside China but with actual business in China).

Trading Hours and Units

Hong Kong stock trading hours are from 9:30 to 12:00 and 13:00 to 16:00 Taipei time, with a one-hour midday break. The trading unit is usually “lot” (the number of shares per lot set by the issuing company). The T+0 system makes trading more flexible, while the T+2 settlement cycle ensures fund safety.

Index System

The Hang Seng Index consists of 50 large Hong Kong companies, reflecting overall market trends; the Hang Seng China Enterprises Index focuses on Chinese H-shares; the Hang Seng Tech Index concentrates on technology and internet companies, serving as an important tool to observe the tech sector in Hong Kong stocks.

Comparison of Hong Kong Stocks and US Stocks

The two major markets differ in many dimensions but share similar operational logic. Hong Kong trading hours align with Taiwan’s schedule (while US stocks require shift work), which is a significant convenience for Taiwanese investors. Both markets have no daily price limit, allow short selling, and are based on market-driven pricing mechanisms.

Key differences include: Hong Kong has a one-hour midday break (US stocks trade continuously), the minimum trading unit is a lot rather than shares (US stocks trade per share, offering more flexibility), dividend tax rates are more favorable (10% for Hong Kong stocks vs. 30% for US stocks), and the exchanges differ (HKEX is a single exchange, while US has multiple: NYSE, NASDAQ, etc.).

In terms of main industry focus, Hong Kong stocks are concentrated in finance, real estate, and technology (especially Chinese concept stocks), whereas US stocks cover technology, consumer, healthcare, semiconductors, and more. From the trading experience, Hong Kong stocks are more accessible, while US stocks are more diverse.

Key Investment Targets in Hong Kong Stocks

Currently, Hong Kong stocks are relatively undervalued, but investors’ core concern is—can these companies withstand market cycles? Below are 15 companies with a market cap over HK$20 billion, categorized by industry position, historical performance, and growth potential. They include both established value stocks and companies worth long-term attention:

In-depth Analysis of Core Hong Kong Stocks

Tencent: The Absolute Core of the Internet Ecosystem

Stock Code: 0700.HK

Investing in any market begins with grasping the largest leader by market cap. Just as Apple is a must-watch in US stocks, Tencent is the focus in Hong Kong stocks. Founded in 1998, it has evolved into a dominant player in communications, social media, gaming, and payments, with a vast shareholder base covering nearly half of China’s internet landscape.

In 2021, policy adjustments caused Tencent’s stock to fall from a high of HK$775 to a trough, but by 2024, with regulatory clarity, the stock stabilized in the HK$400-450 range, with a P/E ratio around 23x, below the five-year average, making valuation attractive. Its social ecosystem is irreplaceable, revenue streams are diversified, and policy risks have been released, making it a top long-term, stable investment target.

BYD: The Global Champion of New Energy Vehicles

Stock Code: 1211.HK

Founded in 1995, BYD started with battery manufacturing and has become a global leader in new energy vehicles. In 2024, sales reached 4.27 million units, surpassing Tesla to become the world’s top EV manufacturer, ranking fourth in global auto sales.

Financially, the performance is impressive: revenue around US$107 billion (+29% YoY), net profit RMB 40.25 billion (+34% YoY), with a per-vehicle gross profit margin of 21.02%, exceeding Tesla’s 17.9%. Accelerating international expansion and factory plans in multiple countries help reduce costs and expand market share. As a beneficiary of the new energy era, BYD’s investment value is self-evident.

CNOOC: Strategic Asset for Energy Supply

Stock Code: 0883.HK

As China’s largest offshore oil and gas producer, CNOOC’s 2024 oil output was 530 million barrels, with natural gas production of 115 billion cubic meters, demonstrating stable energy supply. The IEA forecasts a 2% annual growth in natural gas demand over the next decade, creating a favorable environment for the company’s gas business.

Financial performance is relatively steady, but investors should watch for external factors like global oil price fluctuations, environmental policies, and geopolitical risks. The cyclical nature of energy stocks requires patience and risk management awareness.

Baidu: The AI Platform Player

Stock Code: 9888.HK

Baidu, as China’s leading search engine and AI technology company, reported revenue of about RMB 32.5 billion in Q1 2025 (+3% YoY), driven by cloud computing and AI business acceleration.

China’s cloud computing market is expected to grow at an average annual rate of 30%, with Baidu’s investment potential in this sector significant. The autonomous driving platform “Apollo” has partnered with multiple automakers, providing new growth imagination. Risks include competitive pressure and policy uncertainties.

Pop Mart: The Rising Star of Trendy Culture

Stock Code: 9992.HK

Pop Mart is known for trendy toys and blind box products. Its Labubu series has exploded in recent years, with market value doubling. New product launches often see queues forming. It has over 500 stores worldwide and more than 2,000 vending machines across over 30 countries.

In Q1 2025, revenue grew 165% YoY, with overseas markets growing at 475%. Morgan Stanley predicts Labubu sales may exceed RMB 14 billion by 2027. Currently in a high-growth phase, especially in overseas markets and high-end IP commercialization, worth watching its growth trajectory.

Three Ways for Taiwanese Investors to Allocate Hong Kong Stocks

Method 1: Via Taiwanese Brokerage Firms with Re-Agency

Open an account with local securities firms to trade Hong Kong stocks. Advantages include settlement in TWD without currency exchange; low operational threshold. Disadvantages are only supporting long positions, no leverage, no short selling, higher fees, and limited flexibility.

Method 2: Direct Account Opening with Hong Kong Brokers

Platforms like Interactive Brokers, Futu NiuNiu, etc., offer low fees, but require deposits in HKD or USD, with currency conversion risk. Leverage for single-direction trading is limited, suitable for investors with deep understanding of Hong Kong stocks.

Method 3: CFD Trading

Participate in Hong Kong stock trading via CFD platforms, supporting two-way trading (long and short), leverage, and risk hedging, avoiding currency exchange issues. The downside is that platforms usually cover only large-cap stocks, with limited options for small-cap stocks. For most investors focused on large-cap stocks, CFDs are the most flexible solution.

Key Considerations for Investing in Hong Kong Stocks

First, choosing the right trading platform is crucial

Invest in Hong Kong stocks through regulated platforms with robust risk control. A good platform provides accurate market signals, comprehensive alerts, and strict fund protection. Poor platforms often give false signals, leading to significant losses.

Second, set reasonable stop-loss and take-profit levels

Hong Kong stocks have no daily price limit, and daily volatility can be high, so establishing disciplined risk management is essential. Set reasonable stop-loss levels before opening positions to avoid devastating losses from sudden adverse movements.

Third, diversify investments to reduce concentration risk

Avoid putting all funds into a single stock. Balanced allocation across different industries and market caps helps reduce overall investment volatility. A light position in multiple stocks is better than heavy concentration in one.

Summary: Current Investment Opportunities in Hong Kong Stocks

Compared to the new highs of Nikkei, the near-record levels of US and Taiwanese stocks, Hong Kong stocks are relatively undervalued and contain more value discovery potential. Unless extremely pessimistic about China’s economic outlook, deploying capital into leading companies like Tencent and BYD at these low valuations is a rare opportunity.

Hong Kong stocks’ high volatility brings risks but also opportunities. The key is to choose appropriate entry points and asset mixes based on your risk tolerance, investment horizon, and preferences. In an era of increasing market divergence globally, incorporating Hong Kong stocks into cross-regional asset allocation can be a strategic move.