[Investing for Beginners] Introduction to US Stock and Securities Account Fee Comparison
[Investing for Beginners] Introduction to US Stock and Securities Account Fee Comparison
Start Investing
 • 
US Stock Investing

October 11 • 4 min read

語言: 廣東話

The political and economic instability in Hong Kong has weighed on the city’s stock market. More Hong Kong investors are switching to higher-achieving US stocks among which ETFs are one of the most popular choices.

However, before opening a US stock account, there are a few rules that amateur investors must know. Read on learn the basics of the US stock market and have a fee comparison of the most commonly used US stock securities accounts in Hong Kong!

Minimum fees to buy US Stocks

Hong Kong stocks’ minimum trading unit is a “lot”, the number of shares in each “lot” usually ranges from 100 to 2,000.

Let’s say you want to buy HSBC Holdings (0005) stocks. They have a minimum lot size of 400 shares. If each share costs HKD 58, the minimum account of money to buy a lot of HSBC Holdings (0005) would be over HKD 23,000 (400 shares x HKD 58 plus transaction fees).

In the US, however, the minimum trading unit of US stock is a “share”.

Take Apple Inc. (AAPL) as an example, their stock price was around USD 220 (~HKD 1,716) in October 2019 so you could start investing with just HKD 1,716!

Because of this, generally, the minimum amount you need to invest into US stocks is much lower than Hong Kong stocks.

Fee Comparison of Hong Kong’s most popular US Stock Accounts

Buying US stocks is pretty easy in Hong Kong as most banks provide US stock accounts but the fees are MUCH lower if you buy it through securities firms or robo-advisors.

These transaction costs can add up really quickly, are easily avoidable and offer no value to an investor - so just pick the broker or company with the lowest costs (based on your trading habits).

Here’s a fee comparison of Hong Kong’s most popular securities firms:

Securities Firm / BanksFees
Futu SecuritiesUSD 0.0049 per share (a minimum of USD 0.99);
Platform usage fee USD 0.005 per share (a minimum of USD 1)
8 SecuritiesHKD$88 per month
(Free for accounts with less than HKD 15,000)
HSBCFirst 1,000 shares: USD 18;
Over 1,000 shares: USD 18 + USD 0.015 per additional share
BOCUSD 0.02 per share (a minimum of USD 18 per trade)
Citibank0.5 to 1% (a minimum of USD 30)
Kristal.AI*Free for accounts with less than HKD 400,000

*Kristal.AI is a robo-advisor that builds portfolios of ETFs - different from traditional do-it-yourself stock accounts.

Like we said, it’s cheaper to start investing with a broker and you get a much better user experience:

HK Market
US Market
Futu Securities
Margin Rate
6.8%
Avg. Trade Cost
HKD 20
Welcome Offer
Until October 31, upon successful application, Futu offers: • 1 share of HSBC (valued at HKD 59) if you deposit min. HKD 1 • 1 share of Tencent (valued at HKD 320) if you deposit min. HKD 20,000
Latest Offer: Customer is entitled for extra reward from Futu Securities - HK$100 voucher
Basic Info
Pros & Cons
  • Transaction Fees:  For HK stocks, commissions of 0.03% (min. HKD 3) / trade as a commission fee and HKD 15 / trade as a platform fee. For a HKD 10,000 trade, that's about: HKD 19.5 per transaction (excl. mandatory costs by the HK Exchange, etc.). Tiered pricing also available for people with larger number of trades (min. HKD 1 / trade)
  • Products Available:  HK, US and China stocks and ETFs. Selected funds available via MoneyPlus.
  • Margin Trading:  Annual interest rate as low as 6.8% (for advanced investors)
  • License:  Registered member of the HKEX and licensed by the SFC (Type 1, 2, 4, 5, 9)
Futu Securities
Margin Rate
6.8%
Avg. Trade Cost
HKD 16
Welcome Offer
Until October 31, upon successful application, Futu offers: • 1 share of HSBC (valued at HKD 59) if you deposit min. HKD 1 • 1 share of Tencent (valued at HKD 320) if you deposit min. HKD 20,000
Latest Offer: Customer is entitled for extra reward from Futu Securities - HK$100 voucher
Basic Info
Pros & Cons
  • Transaction Fees:  For US stocks, commissions of US$0.0049 per share (min. US$0.99), and platform fees of US$0.005 per share (min. US$1). For a US$1,000 trade with 5 shares, that's about: US$2 (excl. mandatory costs by the SEC, etc.). Tiered pricing also available for people with larger number of trades
  • Products Available:  HK, US and China stocks and ETFs. Selected funds available via MoneyPlus.
  • Margin Trading:  Annual interest rate as low as 6.8% (for advanced investors)
  • License:  Registered member of the HKEX and licensed by the SFC (Type 1, 2, 4, 5, 9)
Eight Securities
Margin Rate
N/A
Flat Monthly Fee
HKD 88
Basic Info
Pros & Cons
  • Transaction Fees:  Unlimited trades for HKD 88 / month for both US and HK stocks - no other fees.
  • Products Available:  HK and US stocks and ETFs only
  • Margin Trading:  Unavailable
  • License:  Registered member of the HKEX and licensed by the SFC (Type 1, 4)

US Stock Exchange Fees and Taxes

Apart from commissions and platform fees charged by banks and securities firms, investors will also be charged by US regulatory authorities. Yet, it is still generally cheaper than buying Hong Kong stocks. The main fees are as follows:

Charged ItemsFees (in USD)
SEC Fee*Adjusted seasonally, commonly varies from 0.00213% to 0.00218% of the transaction amount
Trading Fee$0.003 per share
Transaction Fee*$0.000119 per share
Dividend Tax Rate30%

*For sale trades only

Trading Hours for the US Stock Market

The trading hours of the US stock market are different in winter and summer times. In summer, the trading hours are from 9:30pm to 4am in Hong Kong time. They are one hour late in winter - from 10:30pm to 5am in Hong Kong time.

3 Major US Stock Indices

Similar to how we have the Hang Seng Index (HIS) in Hong Kong, there are 3 major US stock indices which indicate the overall market performance in the US.

  • Dow Jones Industrial Average (DJIA) – Founded in the 19th century, it measures 30 listed companies including Coca-Cola (KO), Boeing (BA) and Goldman Sachs Group (GS).
  • NASDAQ Composite (NASDAQ) – Founded in 1971, its 100 constituent stocks are mainly from IT, Telecommunication and Biotech sectors, including Google (GOOG), Apple Inc. (AAPL) and Microsoft (MSFT)
  • S&P 500 Index (S&P 500) – Founded in 1957, its constituent stocks are more diversified, measuring 500 listed companies including Facebook (FB), Johnson & Johnson (JNJ) and ExxonMobil (XOM)

Pros of US Stock

  • They have lower entrance fees: The minimum trading unit of US stock is only a share! And the management fee is relatively cheap. You can start investing with less money.
  • They offer more and better choices: Many of the world’s top companies chose to get listed in the US. You can easily find a quality stock of interest and there are more ETFs in the US too.
  • You are exempt from profits tax: Americans are required to pay investment income tax but luckily Hong Kongers don’t have to! Just fill out the W-8BEN form (most securities firms will help you with this!) and declare you’re a foreigner when you open a US stock account and you’re exempt from the tax.
  • They are highly regulated and transparent: The US regulatory authorities put a lot of effort into combating insider trading, market manipulation, financial fraud, etc. so its market transparency is high.

Cons of US Stock

  • The time difference: The opening of the US stock market is at night in Hong Kong. It could be hard for Hongkongers to stay close to the market. If you’re following a long term strategy, then it’s not too big a deal though!
  • The exchange rate: As US stocks are traded in USD, investors must pay attention to the currency conversion cost.
  • More expensive monthly stock investment plans: Investors have to pay for administrative fees of about 5% of contribution in monthly stock investment plans which makes it very hard to justify! Although, since the entry cost for US stocks is much lower, you may not need a stock investment plan at all. You could just buy a few shares of various ETFs to get a diversified portfolio!
  • High dividend tax rate: The US dividend tax is 30% which might weaken the returns on dividend investing.

(Banks and securities firms’ fees and service information are for reference only. Actual charges depend on in-time information provided by banks and securities firm.)

Invest in US ETFs with a Robo-advisor
Robo-advisors can create your US stock portfolio using AI, and you can start with as low as HKD 500!

#US Stock Investing
Share:

Track. Plan. Get advice.

Making your finances easier

22/F, 3 Lockhart Road, Wan Chai, Hong Kong
Planto Limited © 2019
Planto - HK #1 Money Tracker
Making your finances easier