[Investing for Beginners] Introduction to HK stocks - Banks vs Securities Firms Fee Comparison
[Investing for Beginners] Introduction to HK stocks - Banks vs Securities Firms Fee Comparison
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Investments

October 23 • 3 min read

語言: 廣東話

Buying a stock is the first step towards investing. But before you can do that, you need to open a securities account. There’s quite a lot of choice between banks and securities firms - so how do you choose?

Planto will help you compare the most popular Hong Kong stock accounts, show you their fees and share some basic knowledge about Hong Kong stocks to help you get off to a good start.

Comparison of Hong Kong stock investment account fees

Bank / Securities BankOnline Trading CommissionCustody FeeDividend Collection Fee
Futu Securities0.03% of transaction amount (avg. HKD 20)Free of charge0.2% of dividend amount (min. HKD 30)
8 SecuritiesUnlimited transactions (HKD 88 monthly)Free0.5% of dividend amount (min. HKD 28)
BOC Hong Kong0.18% - 0.25% of transaction amount (min. HKD 100)HKD 100 - 150 per half year0.5% of dividend amount (HKD 30 - 2,500)
HSBC0.25% of transaction amount (min. HKD 100)HKD 25 - 30 per month0.5% of dividend amount (min. HKD 30)
Citibank0.18% - 0.25% of transaction amount (min. HKD 100)Free (HKD 100 if inactive for 6 months)0.5% of dividend amount (min. HKD 30)

Trading with brokers is cheaper, opening an account can be done 100% online and the user experience of their apps is often better - there’s no reason not to use them.

Compare brokers

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)

How much do you save by investing with a broker?

Assuming investors put HKD 20,000 each month to invest in stocks and trade on average five times a month. The mainstream banks would cost you ~ HKD 525 each month. If you use the securities brokers mentioned above, the monthly transaction fee is only about HKD 100 per month.

This difference of 425 HKD each month adds up really fast. In 10 years, it becomes HKD 51,000 in expenses (HKD 425 x 12 months x 10 years)!

In fact, if you were to invest this difference with an annual return of 6%, you’d be missing out on almost HKD 70,000!

Using a securities broker obviously reduces the fees - so even though trading with a bank offers some convenience and maybe even some extra credibility, it’s hard to argue whether it’s worth paying that much in fees for. Especially given these brokers are all regulated (licensed by the Securties and Futures Commission of Hong Kong) and are often successful businesses (like Futu which has even IPO’ed)!

Hong Kong stock basics

After completing the opening of the investment account and depositing funds, technically you can start investing immediately. However, it’ll serve you well to know the basics of stocks before making a trading decision.

What is a stock?

A listed company issues shares to investors, and stocks are the evidence that investors own shares. After buying stocks, investors become shareholders of the company, can receive dividends, attend general meetings, and bear the risks caused by stock price fluctuations.

Hang Seng Index

The Hang Seng Index is an indicator of the performance of the Hong Kong stock market. It consists of 50 constituent stocks, mainly in the financial services, public, real estate and industrial and commercial sectors. The Hang Seng Index constituent stocks are often known as “blue chip stocks”.

Hong Kong stock trading unit

Hong Kong stocks are traded on a per-lot basis - this translates to something like: “one lot of shares X share price + handling fee”. As an example, the MTR Corporation (00066) has 500 shares in one lot. If the stock price is HKD 45.1, the minimum amount you’d have to invest is HKD 22,500 (1 lot x 500 shares x HKD 45.1).

Hong Kong stocks trading fees

In addition to the stock market price, the following fees must be paid to the Hong Kong Government, the Securities and Futures Commission or the Hong Kong Stock Exchange:

  • Brokerage commission: Basically what the bank / securities firm is charging - securities firms generally charge less tha banks
  • SFC transaction levy: 0.0027% of transaction amount
  • HKEX trading fee: 0.005% of transaction amount
  • Stock stamp duty: 0.1% of transaction amount
  • Trading system usage fee: HKD 0.5 per transaction (most firms exempt you from this fee, or charge separately!)
  • Central Clearing Shares Payment: 0.002% of the transaction amount (minimum HKD 2)

Hong Kong stock trading hours

The Hong Kong stock market trades on Mondays to Fridays (except public holidays) in the following periods:

Time
Opening Session9:00am - 9:30am
Morning Session9:30am - 12:00pm
Lunch12:00pm - 1:00pm
Afternoon Trading Session1:00pm - 4:00pm
Extended Hours4:00pm - 4:10pm

Exchange Traded Funds (ETF)

ETFs are funds that simulate an index as an investment target, such as Tracker Fund (2800) which matches the performance of the Hang Seng Index. ETF-linked indices can cover single or cross-stock markets, commodities or even different asset classes.

Real Estate Investment Trusts (REITs)

REITs are another investment vehicle that primarily invest in real estate projects in Hong Kong, Mainland China or overseas. The main source of income comes from rent and the net earnings are mandated to be distributed back to shareholders. A list of REITs can be found here.

Robot Investment Advisor (Robo Advisor)

Robo advisors use algorithms to analyze the client’s investment objectives, risks and preferences, and develop a portfolio of investments. They often includes ETFs from Hong Kong, the US or around the world. The advantage of robo-advisors is that they are completely automated, so the fees and minimum investment thresholds are much lower than traditional human investment consultants.

If you need help making a portfolio, maybe a robo-advisor is right for you

Important information: Investment involves risks. This information is intended to be educational and is not tailored to the investment needs of any specific investor. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. Past performance is no guarantee of future results. The value of investments and the income from them can go down as well as up, so you may not get back what you invest.

Recommended reading

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Manson Yau
Working for almost 10 years in journalism while accomplishing small life goals of owning a home and starting a family, my personal finance rule number one is “never rely on a single source of income”. The next challenge is learning to be a working father.
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