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[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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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.

How to start investing in 3 steps

1
Open an account
You can open an account with most brokers 100% online and it only takes about 10 minutes. In most cases, you will need your HKID and address proof and that's about it.
2
Transfer money in
Once your account is opened, you can transfer money through bank transfers or even FPS. You'll need to deposit HKD 10,000 if you want to verify your account online (but otherwise, you can visit them in person!). Your money will usually be received within the same day.
3
Start investing
Once the broker receives the money and your account is verified, you can start investing - that's literally it!

Comparison of Hong Kong stock investment account fees

HK Market
US Market
uSMART Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 8
Welcome Offer: New clients who successfully open an account via Planto promotion page from Jun 1 to Jul 31 2021, both dates inclusive ("the Promotion Period") with the first time deposit, and fulfil all certain requirements will be eligible to redeem a maximum of HK$4,600 welcome reward: 1. The newly registered clients can reward HK$600 cash promotional coupon; 2. 4 shares of Nongfu Spring (09663.HK);
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Latest Offer: 【Limited Time Offer】 From now to 30 June, customers who receive COVID-19 vaccinated & completed the online account registration, they can redeem the correspondence stock coupon; if she/he receives at least one dose of Sinovac vaccine, they can redeem 35 shares of Sino Biopharm (1177.HK) stock coupon: if she/he receives at least one dose of BioNTech vaccine, she/he can redeem 1 share of Pfizer (PFE.US) stock coupon *Applies to newly registered customers who have received the vaccine.
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uSMART Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 12
Welcome Offer: New clients who successfully open an account via Planto promotion page from Jun 1 to Jul 31 2021, both dates inclusive ("the Promotion Period") with the first time deposit, and fulfil all certain requirements will be eligible to redeem a maximum of HK$4,600 welcome reward: 1. The newly registered clients can reward HK$600 cash promotional coupon; 2. 4 shares of Nongfu Spring (09663.HK);
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Latest Offer: 【Limited Time Offer】 From now to 30 June, customers who receive COVID-19 vaccinated & completed the online account registration, they can redeem the correspondence stock coupon; if she/he receives at least one dose of Sinovac vaccine, they can redeem 35 shares of Sino Biopharm (1177.HK) stock coupon: if she/he receives at least one dose of BioNTech vaccine, she/he can redeem 1 share of Pfizer (PFE.US) stock coupon *Applies to newly registered customers who have received the vaccine.
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Webull
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 10
Welcome Offer: Customers applying via Planto are entitled to enjoy the below welcome offers that are valued up to HKD1,000: • 【Webull New Account Offer】HKD0 commission, 1 stock of Alibaba and 1 stock of JD.com Inc when new users open an account and make at least one Hong Kong stock transaction • 【Webull Reservation Reward】Reservations are now open for accounts supporting both Hong Kong and US Markets. Get a free US stock valued at US$50 + 6-month US market quotes within 30 days after the above said account is opened and once a US stock transaction is made. Old customers will get 12 months access to US market quotes upon successful appointment.
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Fuyuan Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 0
Welcome Offer: New customer via Planto is entitled to enjoy the below welcome offer:
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Fuyuan Securities
Custodian Fee
USD 0
Avg. Trade Cost
HKD 15.5
Welcome Offer: New customer via Planto is entitled to enjoy the below welcome offer:
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Futu Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15
Welcome Offer: Apply via Planto and be eligible for HKD 100 supermarket coupon and 1 free share of AAPL after depositing HKD 10,000. *(Daily average asset of HK$10,000 or above must be maintained for 60-days). [Stock transfer offer] New customers who successfully transfer stock into their Futu accounts are eligible for HKD300 supermarket coupon.
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Futu Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15.5
Welcome Offer: Apply via Planto and be eligible for HKD 100 supermarket coupon and 1 free share of AAPL after depositing HKD 10,000. *(Daily average asset of HK$10,000 or above must be maintained for 60-days). [Stock transfer offer] New customers who successfully transfer stock into their Futu accounts are eligible for HKD300 supermarket coupon.
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Valuable Capital Limited
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15.5
Welcome Offer: Until June 30th 2021, the following will be offered by Valuable when new customers: • Open an account online: HK$600 cash coupon and HK$300 IPO coupon • Transfer stocks worth HK$10,000 or above to Valuable : HK$300 cash coupon • From 1 June – 11 June, free iBond subscription fee on VBrokers App • Deposits HKD20,000: Real-time streaming quotes (worth HK$288/m) for HK stocks for 30 days. After 30 days, the real-time streaming quotes continue if your average assets or month-end assets reaches HK$50,000, and you trade 10 times per month in the HK market • Up to 95% margin service with least 1.6% interest rate for IPO subscriptions
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Valuable Capital Limited
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15
Welcome Offer: Until June 30th 2021, the following will be offered by Valuable when new customers: • Open an account online: HK$600 cash coupon and HK$300 IPO coupon • Transfer stocks worth HK$10,000 or above to Valuable : HK$300 cash coupon • From 1 June – 11 June, free iBond subscription fee on VBrokers App • Deposits HKD20,000: Real-time streaming quotes (worth HK$288/m) for HK stocks for 30 days. After 30 days, the real-time streaming quotes continue if your average assets or month-end assets reaches HK$50,000, and you trade 10 times per month in the HK market • Up to 95% margin service with least 1.6% interest rate for IPO subscriptions
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Saxo Markets
Custodian Fee
HKD 0
Avg. Trade Cost
0.08%
(min. HKD 40)
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Saxo Markets
Custodian Fee
From 0.06% p.a.
(min. HKD 38)
Avg. Trade Cost
From HKD 0.05 / share
(min. from HKD 23)
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Charles Schwab, Hong Kong, Ltd.
Custodian Fee
USD 0
Avg. Trade Cost
USD 0
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Custodian Fee
Avg. Trade Cost
BOC Hong Kong
HKD 100 - 150
per half year
0.18% - 0.25%
(min. HKD 100)
BOC Hong Kong
Custodian Fee
HKD 100 - 150
per half year
Avg. Trade Cost
0.18% - 0.25%
(min. HKD 100)
HSBC
HKD 25 - 30
per month
0.25%
(min. HKD 100)
HSBC
Custodian Fee
HKD 25 - 30
per month
Avg. Trade Cost
0.25%
(min. HKD 100)
Citibank
Free
HKD 100 if inactive for 6 months
0.18% - 0.25%
(min. HKD 100)
Citibank
Custodian Fee
Free
HKD 100 if inactive for 6 months
Avg. Trade Cost
0.18% - 0.25%
(min. HKD 100)

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.

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 Session 9:00am – 9:30am
Morning Session 9:30am – 12:00pm
Lunch 12:00pm – 1:00pm
Afternoon Trading Session 1:00pm – 4:00pm
Extended Hours 4:00pm – 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.

#Investments
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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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