If you are looking for a vibrant global, liquid stock market, the Hong Kong market is perfect, making it attractive to investors. It has numerous companies listed on the exchange. There is something for everyone, no matter what your investment goals might be.
Tips for Beginner investors
Here are five things to know if you are a novice trader:
- Do your research. Read annual reports, news articles and financial reports about the companies you are interested in.
- Never lose your temper. Stick to your plan and don’t sell based on emotions.
- Diversify and never put all of your eggs in one basket.
- Plan for the long term. Patience is key to successful investing.
- Understanding that there are risks involved means that sometimes you might make money, but other times you might lose it! However, this shouldn’t discourage you from investing as, over time, the value should go up.
Buying stocks in Hong Kong
To buy stocks in Hong Kong, investors must follow these steps:
1. Learn how to read a stock quote
Before you can even purchase any stocks, you must first learn what a stock quote is and how it is interpreted. A stock quote will tell you several pieces of information about a particular company:
- The ticker symbol of that company’s stock (this code helps investors quickly identify their buying shares).
- The per-share price of those shares (it is usually written as “price: xxx”).
- The total number of outstanding shares for that particular company (also known as float or public float) refers to all common and preferred shares issued by a corporation).
You want to look at the per-share price and the total number of outstanding shares. The per-share price is crucial because it tells you how much each share costs. The more expensive the stock, the fewer shares you will purchase with your investment.
The total number of outstanding shares is crucial because it tells you how many shares are available on the market. If many people buy up stocks, the price will go up since there are not enough shares. Conversely, if many people sell their stocks, the price will go down as demand decreases.
2. Find a company to invest in
Once you know how to read a stock quote, you need to find a company you want to invest in. You can do this by looking at the business section of your local newspaper or by visiting a financial website such as Yahoo! Finance or The Motley Fool.
Once you have found a company you are interested in, you will need to gather more information. This includes reading the company’s annual report (you can usually find it on their website), researching their competition, and checking out news articles that mention them.
3. Start buying shares
If everything looks good, you can start buying shares of that company. Typically, you will want to buy stocks when they are trading at a discount – meaning that the per-share price is lower than the company’s intrinsic value. You can calculate intrinsic value by using a technique called discounted cash flow analysis. If you can’t do that, pay attention to the price-to-earnings ratio. The lower the P/E, the better.
4. A few other tips:
Do not buy stocks from a company whose stock has been downgraded by an analyst, and never purchase a single share of any given company because it is too risky. You should also pay attention to margin rates and interest rates when wanting to borrow money for investing – both will affect your total expenditure for purchasing shares in multiple companies.
To summarise
If you’re interested in buying stocks in Hong Kong, follow these simple steps: find a reputable broker, provide them with your personal information, choose how much money you want to invest and which companies you are interested in. For more information on reputable online brokers, look at this site, and start trading on a demo account today.
