Hong Kong and Mainland Stock Markets Highlights:
| Hong Kong Stock Exchange | Shanghai Stock Exchange | Shenzhen Stock Exchange | ||||
|---|---|---|---|---|---|---|
| Main Board | GEM | A Share | B Share | A Share | B Share | |
| No. of listed companies | 1,848 | 367 | 1,425 | 51 | 2,105 | 48 |
| No. of listed H shares | 232 | 24 | - | - | - | - |
| No. of listed red-chips stocks | 159 | 5 | - | - | - | - |
| Total no. of listed securities | 12,969 | 368 | - | - | - | - |
| Total market capitalization (Billion dollars) |
HKD 32,856 | HKD 248 | RMB 29,874 | RMB 84 | RMB 20,396 | RMB 67 |
| Average P/E ratio (Times) | 11.76 | 42.35 | 14.07 | 11.52 | 25.33 | 7.54 |
Source: HKEX, as at Jun 2018
Broaden and Deepen the Investment Universe
Hong Kong is on top of the league of asset management centres in the world. As the largest user of the Qualified Foreign Institutional Investors (QFII) scheme and the largest destination of the Qualified Domestic Institutional Investors (QDII), Hong Kong has attracted a high concentration of international and Chinese banks, fund management houses and brokerage firms.
The Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programmes, commenced in November 2014 and December 2016 respectively, allow investors in Hong Kong and Mainland China to trade and settle eligible shares listed on the other market via local brokerages, exchanges and clearing houses. Against this background, Hong Kong will continue to build important connectivity with the Mainland markets and to facilitate the gradual opening of China's capital account.
The Mutual Recognition of Funds (MRF) was also introduced in 2015. Under the scheme, eligible Mainland and Hong Kong funds can be distributed in each other’s market through a streamlined vetting process. It provides a channel for foreign investors to access the domestic China market by investing in the funds managed by mainland fund houses, and the other way round.
Northbound Trading of Bond Connect commenced on 3 July 2017, allowing overseas investors from Hong Kong and other regions to invest in the China interbank bond market (CIBM) through mutual access arrangements in respect of trading, custody and settlement. Southbound Trading will be explored at a later stage.
1. Licensing Examination for Securities and Futures Intermediaries
The Securities and Futures Commission (SFC) is responsible for regulating intermediaries carrying out 10 types of dealing and advising activities in Hong Kong. It sets licensing standards to ensure the practitioners are fit and proper.
As a licensed representative, a person accredited to a licensed corporation and carries out regulated activities for the licensed corporation has to sit for the Licensing Examination (LE) for securities and futures intermediaries. Representatives are required to pass a set of LE papers in respect of the types of regulated activities they participate in.
Examples of regulated activities under the SFC:
| Licence | Regulated activities | LE papers required to passed by representatives |
|---|---|---|
| Type 1 | Dealing in securities: Trading stock options and bonds for clients Buying/selling mutual funds and unit trusts for clients Placing and underwriting of securities |
Papers 1, 7, 8 |
| Type 2 | Dealing in futures contracts: Trading index or commodities futures for clients Buying/selling futures contracts for clients |
Papers 1, 7, 9 |
| Type 4 | Advising on securities: Giving investment advice to clients relating to the sale/purchase of securities Issuing research reports/analyses on securities |
Papers 1, 7, 8 |
| Type 5 | Advising on futures contracts: Giving investment advice to clients relating to the sale/purchase of futures contracts Issuing research reports on futures contracts |
Papers 1, 7, 9 |
The Licensing Examination consists of a total of 14 papers. Here are some of the common papers taken by practitioners:
| LE Papers | Topics | No. of multiple-choice questions in the Paper |
|---|---|---|
| Paper 1 | Fundamentals of Securities and Futures Regulation | 60 |
| Paper 7 | Financial Markets | 60 |
| Paper 8 | Securities | 40 |
| Paper 9 | Derivatives | 40 |
| Paper 12 | Asset Management | 40 |
2. PRC Securities Regulations Examination
Under the Closer Economic Partnership Arrangement (CEPA), Hong Kong professionals (defined as Hong Kong permanent residents who possess a relevant licence issued by the SFC) applying for securities and futures industry qualifications of the Mainland are only required to undertake training and pass the examination related to the Mainland laws and regulations. They are exempted from the examination on professional knowledge.
Hong Kong professionals can enrol for the PRC Securities Regulations Examination offered by the Securities Association of China (SAC) through Hong Kong Securities and Investment Institute (HKSI).
The Securities and Futures Commission (SFC):
http://www.sfc.hk
Hong Kong Securities and Investment Institute (HKSI):
http://www.hksi.org
Vocational Training Council (VTC) – PEAK Exam Centre:
https://www.peak.edu.hk
Securities Association of China (SAC):
http://www.sac.net.cn/
