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HK Investors: Calm Amidst Daily Swings from 100k to -1M Profits?
"How joyful the National Day holiday was, how melancholic the post-holiday feels." Hong Kong stock investor Ms. Huang sighed to the reporter in this way.
After the Hang Seng Index in Hong Kong broke through the 20,000 and 23,000 points before and after the National Day, it fell for two consecutive days on October 8th and 9th, with a total drop exceeding 10%. Ms. Huang said that the profit of "earning 100,000 Hong Kong dollars a day" during the National Day holiday was "regurgitated" in these two days, as if she had "fryed" in vain. However, since she has experienced more significant drops in the past, she has become numb. She also told the reporter that her friends who invest in Hong Kong stocks around her have suffered greater losses, with some losing up to a million Hong Kong dollars a day.
Faced with the recent round of continuous rises and sudden sharp declines in Hong Kong stocks, different investors have different feelings: some novice investors feel they have been "played" by Hong Kong stocks, "chopping meat" after taking over at high positions, but the market starts to rise again after "chopping meat", and they collapse in an instant; investors like Ms. Huang, who have experienced several rounds of bull and bear markets, have long been accustomed to the market's sharp rises and falls; some investors have also begun to worry, uncertain about how the market will develop in the future.
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On October 10th, after the Hong Kong stock market continued to rise and then slightly adjusted, Ms. Huang finally felt a bit of "blood recovery".
During the National Day holiday, thanks to the significant rise in Hong Kong stocks, many mainland investors went to Hong Kong to open securities accounts and joined the ranks of Hong Kong stock investors. Although the market experienced significant fluctuations afterwards, some mainland investors firmly believe that with the Federal Reserve's interest rate cuts, foreign capital will continue to flow back, and now is a good time to invest in Hong Kong stocks.
The market has risen and fallen sharply.
Ms. Huang, who has invested in A-shares for many years, started investing in Hong Kong stocks with a principal of 200,000 Hong Kong dollars at the beginning of this year. At that time, she felt that the prices of many Hong Kong-listed companies were very cheap, so she identified several Hong Kong stocks and kept "buying high and selling low". During this period, she made profits and losses, and also added some positions successively, earning nearly 100,000 Hong Kong dollars by the beginning of September. She said she is more patient and adopts a "slow and steady" investment strategy.
In mid-September, after the Federal Reserve cut interest rates by 50 basis points, Hong Kong stocks experienced a wave of rises. On September 26th, the Hang Seng Index closed up 4.16%, reporting 19,924.58 points, setting a high since August 2023. Ms. Huang watched the index go up all the way, and at one point in the afternoon near the highest position, she made more than 40,000 Hong Kong dollars, but later there was a certain decline. On September 27th, the Hang Seng Index continued to rise, closing up 3.41% at noon, returning to the 20,000-point mark. In this way, Ms. Huang earned 120,000 Hong Kong dollars in just two or three days. At that time, some friends were worried that Hong Kong stocks would experience a sharp decline during the National Day holiday and advised her to "run" quickly after making money, but she believed that the policy support was so strong that it should be able to rise for a while longer, so she did not sell the stocks in her hand.
On October 2nd, the Hang Seng Index rose by 1,310 points on the first trading day after the National Day holiday, with a gain of 6.2%, and returned to the 22,000-point mark, closing at 22,443.73 points, with a transaction volume of 43.402 billion Hong Kong dollars that day. For the first time in her life, Ms. Huang achieved a "daily income of 100,000 Hong Kong dollars", and she was fortunate to have persisted with her original idea.
Unlike Ms. Huang, although Ms. Lin has opened a Hong Kong stock account for some time, she has never traded. Seeing the performance of the market on the first trading day after the National Day holiday, Ms. Lin suddenly "got hot-headed" and wanted to participate, so she decided to place an order to buy in the early morning of October 3rd. However, she did not expect the system to show that the transaction could not be completed, and it was impossible to change or withdraw the order within five minutes. At that time, the stock price had already started to fall, but the transaction had not yet been completed, so Ms. Lin decisively clicked to withdraw the order. About a minute later, the system showed that the withdrawal was unsuccessful, and the purchase was successful, with the transaction price at the highest level.On that day, the Hang Seng Index fell by more than 4% at one point and closed down by 1.47%. The stock that Ms. Lin bought fell by 13%. On October 4th, after the Hong Kong stock market opened low, it continued to decline. Frightened, Ms. Lin sold all the stocks she bought yesterday. However, she didn't expect that the Hong Kong stock market would rebound quickly after probing lower that day, opening low and closing high, with a 2.82% increase for the day. The Hang Seng Technology Index even surged by 4.99%. This made Ms. Lin feel "driven crazy", as she felt she had been "played" by the Hong Kong stock market.
A broker from Yaocai Securities told the reporter that during the National Day holiday, the trading volume surged, and the trading APP would experience lag. Pages that used to take one or two seconds to switch could take about ten seconds during peak trading hours, and there might also be situations where transactions could not be completed or orders could not be canceled.
On October 7th, the Hang Seng Index continued to open high and trade high, closing up by 1.6%, while the Hang Seng Technology Index closed up by 3.05%. In the early morning of that day, Ms. Huang cautiously chose to reduce her position in a "demon stock". After reducing her position, she found that the stock continued to rise after increasing by 25% over several consecutive days.
The "frenzied rise" of the Hong Kong stock market during the National Day holiday finally hit the "pause button" on the day when the A-share market opened after the holiday. On October 8th, after the Hang Seng Index opened low, it continued to decline, falling by more than 10% at one point, and the Hang Seng Technology Index fell by more than 14%. By the end of the day, the Hang Seng Index had fallen by 9.41%, and the Hang Seng Technology Index had fallen by 12.82%. On the market, only the aquaculture sector rose, while other sectors declined collectively.
Faced with the sharp drop in the Hong Kong stock market, Ms. Huang felt a mix of emotions. In her view, the pullback was normal, after all, it had risen so much before, but the pullback was too large in one day, which also made her a bit sad. On October 9th, the Hong Kong stock market weakened again, and the market fell for two consecutive days. Ms. Huang told the reporter that she had "regurgitated" all the profits she made during the National Day holiday, and some of her friends around her, because they increased their investment leverage, suffered daily losses of up to millions of Hong Kong dollars.
The aforementioned broker said that during the National Day holiday, each business department would open about fifteen or sixteen new securities accounts a day. The Shangshu office, due to its proximity to Luohu in Shenzhen, could open thirty or forty securities accounts a day. Starting from October 8th, the number of account openings decreased, with an average of five or six accounts opened per day.
Despite the "roller coaster" market fluctuations, there are still mainland investors choosing to join the ranks of investing in Hong Kong stocks at this time.
On October 9th, Mr. Chen arrived at the Tsim Sha Tsui branch of HSBC Bank at eight in the morning to handle bank account opening business, when the bank had not yet started business. In the past, many mainland investors would choose this branch to open accounts, and sometimes long queues would form at six or seven in the morning. But there were not many people that morning, with four or five people in front of Mr. Chen.
Mr. Chen said at the queue that the purpose of his visit to open an account was to invest in Hong Kong stocks. According to his introduction, Mr. Chen has been working in finance in Shenzhen for five or six years, and has been investing in A-shares before. This time, in addition to continuing to invest in A-shares, he also wants to seize the trend of this wave of Hong Kong stocks. Mr. Chen believes that after the Federal Reserve's interest rate cut, he believes that foreign capital will further flow back, and Hong Kong stocks have a relatively high cost-performance ratio, which will be one of the preferred choices for foreign capital. In addition, he believes that the mainland government will continue to introduce relevant economic stimulus policies, which are also expected to promote the Hang Seng Index to usher in a new round of rises.Mr. Chen has prepared all the necessary documents such as the Hong Kong and Macau Travel Permit, customs clearance receipt, ID card, proof of residential address, etc., hoping to open an investment account smoothly in one go. According to the reporter's understanding, compared to general bank accounts, to invest in stocks, funds, bonds, or structured investment products at HSBC Bank, an additional investment account needs to be opened. In addition to preparing the aforementioned materials, the bank may also need to review the account opener's bank assets and income statements.
The reporter learned from interviews that since 2023, Chinese-funded brokers in Hong Kong have successively suspended processing new account applications from mainland investors. For mainland investors who want to open a securities account at Chinese-funded brokers in Hong Kong, they need to meet one of the following two conditions: first, holding a Hong Kong ID card; second, providing proof of overseas work or long-term residence.
Leading internet brokers registered in Hong Kong, such as Futu Securities and Valuable Securities, also stipulate that mainland investors need to provide proof of overseas securities accounts opened before May 18, 2023, or February 29, 2024, and other related materials in order to open a securities account at Futu Securities and Valuable Securities.
Therefore, for mainland investors like Mr. Chen who have not previously opened overseas securities accounts, the financial institutions available for account opening are relatively limited, such as large banks in Hong Kong like HSBC and Bank of China (Hong Kong), as well as Hong Kong-funded brokers. Generally speaking, the latter charges lower commission fees (transaction fees) per transaction.
According to the reporter's understanding, the commission rate of Hong Kong-based broker Bright Securities is 0.0668%, that is, a transaction of 100,000 Hong Kong dollars will be charged a fee of 66.8 Hong Kong dollars. A commission fee is charged for each transaction, with a minimum charge of 50 Hong Kong dollars (for example, a transaction of 10,000 Hong Kong dollars, which should be charged 6.68 Hong Kong dollars according to the commission rate, but based on the minimum charge rule, 50 Hong Kong dollars will still be charged as commission). In addition, Bright Securities has also launched a series of preferential policies for account opening, such as no commission fees within 30 days from the day of account opening; meeting certain conditions can also receive a small number of free stock shares, etc.
In addition to charging commission fees for each transaction, large banks in Hong Kong also charge custody fees. The commission rate of HSBC and Bank of China (Hong Kong) is 0.25%, with a minimum charge of 100 Hong Kong dollars per transaction, and a custody fee of 25 Hong Kong dollars/month; the commission rate and minimum charge per transaction of Standard Chartered Bank are the same as the aforementioned two banks, while the custody fee is 30 Hong Kong dollars/month.
Although Hong Kong banks charge more fees, Mr. Chen still prefers large banks in Hong Kong for the sake of fund security. In his view, since he has chosen to engage in investment transactions, he won't care too much about the extra fees charged by the institution.
The reporter noticed that a man in line in front of Mr. Chen left the bank account opening counter very frustrated because his account opening application was rejected. The man told the reporter that he also wanted to open an investment account, but the bank staff thought he was too young and lacked work and investment experience, so they rejected his account opening application.
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