Hong Kong stock market

The Hong Kong stock market is normally not considered a part of the China stock market, despite the fact that Hong Kong is now a part of the People's Republic of China. Hong Kong was a United Kingdom Crown Colony from 1842 until it turned into a British dependent territory as a result of the British Nationality Act of 1981. In 1997, Hong Kong was returned to China and it is today a special administrative region of the People's Republic of China. According to the Sino-British Joint Declaration and the Basic Law of Hong Kong, the territory will enjoy a high level of autonomy until at least 2047. Today, Hong Kong does for instance maintain its own legal and monetary system. This naturally has a major effect on the Hong Kong stock market and sharply separates it from the China mainland stock market.

The Hong Kong stock market is characterized by Hong Kong's strong capitalist economy, an economy founded on a free market policy, low taxation and a tradition of government non-intervention. Hong Kong is a major international finance and trade centre and has the highest concentration of corporate headquarters in the entire Asia-Pacific region.

The Hong Kong stock market is focused on two major exchanges:

• Hong Kong Stock Exchange (SEHK)
• Hong Kong Growth Enterprise Market (HKGEM)

Hong Kong Stock Exchange (SEHK)

The Hong Kong Stock Exchange is the 5th biggest stock exchange in the world by market capitalization of listed companies and in 2007 it reached a total market capitalization of over US$ 2.124 trillion. The holding company for the exchange is the Hong Kong Exchanges and Clearing.

In Hong Kong, informal and unofficial exchanges for securities are known to have been active since at least the 1860s, but it wasn’t until 1891 that the first formal exchange was established for the Hong Kong stock market. At various points in time, the Honk Kong Stock Exchange has worked side by side with other exchanges, but it has almost always been the dominating exchange on the Hong Kong stock market. Through a long row of intricate mergers and acquisitions, the SEHK monopolized the market from 1947 to 1969. Another important step in the history of the Hong Kong stock market was taken in 1986 when  SEHK integrated computers and modernized its entire structure. In 1993, the "Automatic Order Matching and Execution System" (AMS) was launched, a system which was in turn replaced by the AMS/3 in the year 2000.

Hong Kong Growth Enterprise Market (HKGEM)

The Hong Kong Growth Enterprise Market was set up by Stock Exchange of Hong Kong to cater for the needs of growth companies that do not fulfil the requirements of track record or profitability. The principal listing requirements for this part of the Hong Kong stock market is very different from those used by the big Hong Kong Stock Exchange. There is for instance no profit requirement, since an enterprise can be highly promising without having reached any past profit record yet.

If you want to list your company with the Hong Kong Growth Enterprise Market, the company must be incorporated under the laws of Hong Kong, Bermuda, the Cayman Islands or the PRC. Your company must also be able to show at least 24 months of Active Business Pursuits immediately preceding the date of application submission, unless it qualifies for an exemption from this requirement.

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