U.S. warns Japan over currency

WASHINGTON (MarketWatch) — The U.S. Treasury on Friday warned Japan not to actively weaken its currency as it again refrained from naming China a manipulator.

ECONOMY AND POLITICS | @MKTWEconomics

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In its twice-a-year assessment of whether any nation is a currency manipulator, Treasury said it will “closely monitor” Japan’s policies and the extent to which they support the growth of domestic demand. The new Shinzo Abe administration has pushed for aggressive bond-buying at the Bank of Japan, and the yen /quotes/zigman/4868099/sampled USDJPY -1.3103% has dropped 13% against the dollar this year. The Japanese currency rose in Friday afternoon trade after the report was released.

“We will continue to press Japan to adhere to the commitments agreed to in the G-7 and G-20, to remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes,” the Treasury said.

Bloomberg News/Landov

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Shinzo Abe, Japan's prime minister, left, meets with U.S. President Barack Obama in February.

China meanwhile escaped being branded a currency manipulator by the U.S. government, due to an appreciation in the yuan and a drop in its current account surplus.

China hasn’t been named a manipulator since 1994. Both Obama and George W. Bush administrations have been loath to name China a manipulator because of fears of escalating trade tensions.

Since China moved off an exchange-rate peg in June 2010, the renminbi /quotes/zigman/4869230/sampled USDCNY -0.0323% , or yuan, has climbed 10%, the Treasury said in a report. That gain is over 16% in inflation-adjusted terms through February. And China’s current account surplus has shrunk to 2.3% of gross domestic product in 2012 from 10.1% in 2007.

“China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime,” the Treasury said.

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Chinese President Xi Jinping (R) shakes hands with U.S. Secretary of Treasury Jacob Lew (L) during his visit to the Great Hall of the People on March 19, 2013 in Beijing.

“Nonetheless, the available evidence suggests the RMB remains significantly undervalued, intervention appears to have resumed, and further appreciation of the RMB against the dollar is warranted.”

The U.S. did note that China’s reserve accumulation picked up toward the end of 2012 — to $34.7 billion in the fourth quarter, after an average of $21.3 billion in the first three quarters. China held $3.3 trillion in reserves at the end of 2012, or about 40% of GDP.

The U.S. has recorded a $51 billion trade deficit in goods with China through the first two months of the year, far and away its biggest trade gap with any nation. And it isn’t just low-end goods China is shipping: the country is winning increasing market share in advanced U.S. manufacturing, according to a report from the U.S. Business and Industry Council.

The report was due Monday, though the Treasury Department in the past has postponed the report until after international gatherings in the hope of seeing China concessions. The International Monetary Fund and World Bank hold their meetings next week.

(The late Friday release isn't that unusual, however; the last report came a few days after Thanksgiving, and the one before that was also released on a Friday.)

Then again, Federal Reserve Chairman Ben Bernanke has been on the defensive at international gatherings for the central bank’s bond-buying efforts that have weakened the dollar.

The Bank of Japan, the Bank of England and the European Central Bank also have engaged in bond buying

Equities and ETFs

What are Equities and ETFs?

Equities¹ represent ownership stakes in corporations. Typical equities may include common stock, preferred stock, foreign equities and closed-end funds.

An ETF, or Exchange Traded Fund², is a collection of assets (like an index fund³) of equities, commodities, and/or bonds that is bought and sold like a stock in real-time on a stock exchange. Most ETFs are not actively managed, but instead are designed to track an index. In general the expense ratios of ETFs are relatively low. Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated every day like a mutual fund does.

Both equities and ETFs can offer potential growth from market price appreciation; however, they are subject to market volatility and thus, open to market price risk and potential loss of principal

Insider Trading

“ Insider trading” refers to transactions in a company’s securities, such as stocks or options, by corporate insiders or their associates based on information originating within the firm that would, once publicly disclosed, affect the prices of such securities. Corporate insiders are individuals whose employment with the firm (as executives, directors, or sometimes rank-and-file employees) or whose privileged access to the firm’s internal affairs (as large shareholders, consultants, accountants, lawyers, etc.) gives them valuable information. Famous examples of insider trading include transacting on the advance knowledge of a company’s discovery of a rich mineral ore (Securities and Exchange Commission v. Texas Gulf Sulphur Co.), on a forthcoming cut in dividends by the board of directors (Cady, Roberts & Co.), and on an unanticipated increase in corporate expenses (Diamond v. Oreamuno). Although insider trading typically yields significant profits, these transactions are still risky. Much trading by insiders, though, is due to their need for cash or to balance their portfolios. The above definition of insider trading excludes transactions in a company’s securities made on nonpublic “outside” information, such as the knowledge of forthcoming market-wide or industry developments or of competitors’ strategies and products. Such trading on information originating outside the company is generally not covered by insider trading regulation.

Insider trading is quite different from market manipulation, disclosure of false or misleading information to the market, or direct expropriation of the corporation’s wealth by insiders. It also should be noted that transactions based on unequally distributed information are common and often legal in labor, commodities, and real estate markets, to name a few. Nevertheless, many people still find insider trading in corporate securities objectionable. One objection is that it violates the fiduciary duties that corporate employees, as agents, owe to their principals, the shareholders (Wilgus 1910). A related objection is that, because managers control the production of, disclosure of, and access to inside information, they can transfer wealth from outsiders to themselves in an arbitrary and hidden way (Brudney 1979; Clark 1986). The economic rationale advanced for prohibiting insider trading is that such trading can adversely affect securities markets (Khanna 1997) or decrease the firm’s value (Haft 1982).



Regulation of insider trading began in the United States at the turn of the twentieth century, when judges in several states became willing to rescind corporate insiders’ transactions with uninformed shareholders. One of the earliest (and unsuccessful) federal attempts to regulate insider trading occurred after the 1912–1913 congressional hearings before the Pujo Committee, which concluded that “the scandalous practices of officers and directors in speculating upon inside and advance information as to the action of their corporations may be curtailed if not stopped.” The Securities Acts of 1933–1934, passed by the U.S. Congress in the aftermath of the stock market crash, though aimed primarily at prohibiting fraud and market manipulation, also targeted insider trading. This federal legislation mandated disgorgement of profits made by corporate insiders on round-trip transactions (a purchase and later sale or a sale and later purchase) effected within six months, required disclosure of past inside transactions, and prohibited insiders from selling “borrowed” shares of their companies. However, the Securities Acts did not contain a broad prohibition of insider trading as such.



Broader enforcement of restrictions on insider trading began only in the 1960s, when the U.S. Securities and Exchange Commission (SEC) prosecuted the Cady, Roberts and Texas Gulf Sulphur cases using Rule 10b-5, a catch-all provision against securities fraud. In those and subsequent cases that shaped the evolution of the general insider trading prohibition, the SEC based its justification for regulation on the unfairness of unequal access to information, the violation of fiduciary duties by insiders, and the misappropriation of information as a form of property. The U.S. Congress and the SEC increased penalties for the use of inside information, extended the prohibition into derivatives markets, proscribed selective disclosure of information, and even placed restrictions on the use of certain types of “outside” information, dealing mainly with takeovers pursued by third parties. Nevertheless, federal legislators have never defined insider trading; in the 1980s, the SEC actually opposed efforts to do so. Since the U.S. Supreme Court decided United States v. O’Hagan in 1997, however, the judicial definition of proscribed activities has become fairly clear: it includes trading by corporate insiders and their associates on inside information as well as trading by individuals who misappropriate certain types of “outside” information from third parties.



As of 2004, at least ninety-three countries, the vast majority of nations that possess organized securities markets, had laws regulating insider trading. Several factors explain the rapid emergence of such regulation, particularly during the last twenty years: namely, the growth of the securities industry worldwide, pressures to make national securities markets look more attractive in the eyes of outside investors, and the pressure the SEC exerted on foreign lawmakers and regulators to increase the effectiveness of domestic enforcement by identifying and punishing offenders and their associates operating outside the United States. In some countries, insider trading had been regulated through private means before the arrival of public regulation, as the examples of the United Kingdom’s City Code on Takeovers and Mergers and the German Voluntary Insider Trading Guidelines show. At the same time, the effectiveness of the insider trading prohibition and the commitment to enforcing it have been low in most countries (Bhattacharya and Daouk 2002).



Who benefits from regulation of insider trading? One group of beneficiaries is market professionals—broker-dealers, securities analysts, floor traders, arbitrageurs, and institutional investors. The reason is that they are “next in line” for trading profits, as they possess an advantage over public investors in collecting and analyzing information (Haddock and Macey 1987). Regulation also, of course, benefits the regulators—that is, the SEC—by giving that agency greater power, prestige, and budget (Bainbridge 2002). However, the benefits from insider trading laws to small shareholders, the alleged primary beneficiaries, have been extensively debated.



Henry G. Manne popularized the economic analysis of insider trading (Manne 1966), although a similar book-length attempt by Frank P. Smith is dated a quarter century earlier (Smith 1941). The major public policy questions economists and legal scholars have tried to answer are: How extensive should restrictions on insider trading be and should they be mandatory through the means of public regulation or voluntary by individual companies and securities exchanges? Empirical research has focused on the profitability of insiders’ transactions, the effects of insider trading on securities prices and transaction costs, and the effectiveness of regulation. Such studies have had one common methodological problem: precise data on illegal insider trading, as opposed to disclosed insiders’ transactions, are, by their very nature, not readily available.



Many researchers argue that trading on inside information is a zero-sum game, benefiting insiders at the expense of outsiders. But most outsiders who bought from or sold to insiders would have traded anyway, and possibly at a worse price (Manne 1970). So, for example, if the insider sells stock because he expects the price to fall, the very act of selling may bring the price down to the buyer. In such a case, the buyer who would have bought anyway actually gains. But this does not mean that no one loses because of insider trading, although such losses are likely to be diffuse and not easily traceable (Wang and Steinberg 1996). The outsiders who lose in such a situation are buyers on the margin, who would not have bought unless the insider had sold and brought the price down slightly, and sellers who sold for less or could not sell at all. Consequently, some commentators argue that such systematic diversion of wealth from outsiders to insiders may decrease the share price and raise the corporate cost of capital (Mendelson 1969). However, long-term shareholders, as opposed to those speculating on short-term price movements, are rarely adversely affected by insider trading because the probability is low that such trading would affect the timing of their transactions and the corresponding market price (Manne 1966).



A controversial case is that of abstaining from trading on the basis of inside information (Fried 2003). For example, an insider who had planned to sell stock but abstains on the basis of positive inside information thereby marginally prevents a potential buyer from getting a better deal on the stock. In a sense, the insider’s abstention transfers wealth from the potential buyer to himself, although this does not happen consistently. Yet, it is clearly infeasible to monitor and prosecute insiders for not trading.



There is little disagreement that insider trading makes securities markets more efficient by moving the current market price closer to the future postdisclosure price. In other words, insiders’ transactions, even if they are anonymous, signal future price trends to others and make the current stock price reflect relevant information sooner. Accurately priced stocks give valuable signals to investors and ensure more efficient allocation of capital. The controversial question is whether insider trading is more or less effective than public disclosure. Insider trading’s advantage is that it introduces individual profit motives, does not directly reveal sensitive intercorporate information, and mitigates the management’s aversion to disclosing negative information (Carlton and Fischel 1983; Scott 1980). Insider trading’s potential disadvantage is that it may be a more ambiguous and less reliable signal than disclosure (Cox 1986). Empirical work demonstrates that insider trading does move prices in the correct direction (Meulbroek 1992). Some researchers argue, though, that this additional price accuracy only redistributes wealth instead of making the process of capital allocation more efficient, because insider trading speeds up the process by only a few days or weeks without affecting the long-run attractiveness of a company as an investment (Klock 1994).



Probably the most controversial issue in the economic analysis of insider trading is whether it is an efficient way to pay managers for their entrepreneurial services to the corporation. Some researchers believe that insider trading gives managers a monetary incentive to innovate, search for, and produce valuable information, as well as to take risks that increase the firm’s value (Carlton and Fischel 1983; Manne 1966). Researchers have also pointed out that compensation in the form of insider trading is “cheap” for long-term shareholders because it does not come from corporate profits (Hu and Noe 1997). Their opponents contend that insider trading has some downside incentives and is likely to reward mere access to information rather than its production. The argument is that allowing insider trading may encourage managers to disclose information prematurely (Bainbridge 2002) or delay disclosure in order to arrange stock trades (Schotland 1967), to delay transmitting information to corporate decision makers (Haft 1982), to pursue excessively risky projects that increase trading profits but reduce corporate value (Easterbrook 1981), to increase tolerance for bad corporate performance by allowing insiders to profit on negative developments (Cox 1986), and to determine their compensation unilaterally (Clark 1986). This controversy has not been resolved and is difficult to test empirically.



Another economic argument for insider trading is that it provides efficient compensation to holders of large blocks of stock (Demsetz 1986; Thurber 1994). Such shareholders, who provide valuable corporate monitoring and sometimes cannot diversify their portfolios easily—and thus bear the disproportionate risk of price fluctuations—are compensated by trading on inside information. However, proponents of regulation point out that such an arrangement would allow large shareholders to transfer wealth from smaller shareholders to themselves in an arbitrary fashion and, possibly, provoke conflicts between these two groups (Maug 2002). This concern may explain why the SEC, in 2000, adopted Regulation FD (FD stands for “full disclosure”) banning selective disclosure of information by corporations to large shareholders and securities analysts.



A common contention is that the presence of insider trading decreases public confidence in, and deters many potential investors from, equity markets, making them less liquid (Loss 1970). But the possibility of trading with better-informed insiders would likely cause investors to discount the security’s price for the amount of expected loss rather than refusing to buy the security (Carney 1987). Empirical comparisons across countries do not clearly demonstrate that stricter enforcement of insider trading regulation has directly caused more widespread participation in equities markets. Another argument is that insider trading harms market liquidity by increasing transaction costs. The alleged reason is that market makers—specialized intermediaries who provide liquidity by continuously buying and selling securities, such as NYSE specialists or NASDAQ dealers—consistently lose from trading with insiders and recoup their losses by increasing their bid-ask spread (the differential between buying and selling prices) (Bagehot 1971). Yet, the lack of actual lawsuits by market makers, except in options markets, is strong evidence that insider trading is not a real concern for them. Moreover, econometric attempts to find a relationship between the bid-ask spread and the risk of insider trading have been inconsistent and unreliable (Dolgopolov 2004).



Empirical research generally supports skepticism that regulation of insider trading has been effective in either the United States or internationally, as evidenced by the persistent trading profits of insiders, behavior of stock prices around corporate announcements, and relatively infrequent prosecution rates (Bhattacharya and Daouk 2002; Bris 2005). Even in the United States, disclosed trading by corporate insiders generally yields them abnormal profits (Pettit and Venkatesh 1995). Thus, insider trading regulation may affect the behavior of certain categories of traders, but it does not eliminate profits from trading on private information. The likely explanation for the fact that profits remain is that the regulation shifts insiders’ emphasis from legal to illegal trading, changes insiders’ trading strategies, or transfers profits to market professionals. For these reasons, some scholars doubt the value of such laws to public investors; moreover, enforcement is costly and could be dangerously selective.



Several researchers have proposed that market professionals (notably, securities analysts) be allowed to trade on inside information (Goshen and Parchomovsky 2001). These researchers reason that such professionals enjoy economies of scale and scope in processing firm-specific and external information and are removed from corporate decision making. Therefore, allowing market professionals to trade on inside information would create more liquidity in securities markets and stimulate competition in the acquisition of information. The related argument is that the “outside” search for information is more socially valuable, even if it is occasionally more costly, and that trading by corporate insiders may crowd out securities research on external factors (Khanna 1997). Thus, the proponents of regulation argue that unrestricted insider trading would adversely affect the process of gathering and disseminating information by the securities industry, and this point of view has some empirical support (Bushman et al. 2005). On the other hand, permitting insiders to trade on inside information may allow companies to pay managers less because they have insider-trading opportunities. In fact, there is evidence from Japan and the United States that the cash portion of executive salaries is lower when potential trading profits are higher (Hebner and Kato 1997; Roulstone 2003). If market professionals could trade legally on private information but insiders could not, public shareholders would still lose, while being unable to recoup their trading losses in the form of higher corporate profits because of lower managerial compensation (Haddock and Macey 1987).



Despite numerous and extensive debates, economists and legal scholars do not agree on a desirable government policy toward insider trading. On the one hand, absolute information parity is clearly infeasible, and information-based trading generally increases the pricing efficiency of financial markets. Information, after all, is a scarce economic good that is costly to produce or acquire, and its subsequent use and dissemination are difficult to control. On the other hand, insider trading, as opposed to other forms of informed trading, may produce unintended adverse consequences for the functioning of the corporate enterprise, the market-wide system of publicly mandated disclosure, or the market for information. While the effects of insider trading on securities prices and insiders’ profits have been extensively studied empirically, the incentive effects of insider trading and its impact on the inner functioning of corporations are not well known. It also should be considered that individual firms have an incentive to weigh negative and positive consequences of insider trading and decide, through private contracting, whether to allow it. The case for having public regulation of insider trading must, therefore, rest on such factors as inefficiency of private enforcement or insider trading’s overall adverse impact on securities markets.

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About the Author

Stanislav Dolgopolov is a John M. Olin Fellow in Law and Economics at the University of Michigan Law School.

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Further Reading

Introductory

Brudney, Victor. “Insiders, Outsiders, and Informational Advantages Under the Federal Securities Laws.” Harvard Law Review 93 (1979): 322–376.

Carlton, Dennis W., and Daniel R. Fischel. “The Regulation of Insider Trading.” Stanford Law Review 35 (1983): 857–895.

Haft, Robert J. “The Effect of Insider Trading Rules on the Internal Efficiency of the Large Corporation.” Michigan Law Review 80 (1982): 1051–1071.

Hu, Jie, and Thomas H. Noe. “The Insider Trading Debate.” Federal Reserve Bank of Atlanta Economic Review 82 (4th Quarter 1997): 34–45.

Klock, Mark. “Mainstream Economics and the Case for Prohibiting Insider Trading.” Georgia State University Law Review 10 (1994): 297–335.

Manne, Henry G. Insider Trading and the Stock Market. New York: Free Press, 1966.

Wang, William K. S., and Marc I. Steinberg. Insider Trading. Boston: Little, Brown, 1996.

Advanced

Bagehot, Walter [pseudonym for Jack L. Treynor]. “The Only Game in Town.” Financial Analysts Journal 27 (March–April 1971): 12–14, 22.

Bainbridge, Stephen M. Corporation Law and Economics. New York: Foundation Press, 2002.

Bhattacharya, Utpal, and Hazem Daouk. “The World Price of Insider Trading.” Journal of Finance 57 (2002): 75–108.

Bris, Arturo. “Do Insider Trading Laws Work?” European Financial Management 11 (2005): 267–312.

Bushman, Robert M., Joseph D. Piotroski, and Abbie J. Smith. “Insider Trading Restrictions and Analysts’ Incentives to Follow Firms.” Journal of Finance 60 (2005): 35–66.

Carney, William J. “Signaling and Causation in Insider Trading.” Catholic University Law Review 36 (1987): 863–898.

Clark, Robert Charles. Corporate Law. Boston: Little, Brown, 1986.

Cox, James D. “Insider Trading and Contracting: A Critical Response to the ‘Chicago School.’” Duke Law Journal 1986 (1986): 628–659.

Demsetz, Harold. “Corporate Control, Insider Trading, and Rates of Return.” American Economic Review 76 (1986): 313–316.

Dolgopolov, Stanislav. “Insider Trading and the Bid-Ask Spread: A Critical Evaluation of Adverse Selection in Market Making.” Capital University Law Review 33 (2004): 83–180.

Easterbrook, Frank H. “Insider Trading, Secret Agents, Evidentiary Privileges, and the Production of Information.” Supreme Court Review 1981 (1981): 309–365.

Fried, Jesse M. “Insider Abstention.” Yale Law Journal 113 (2003): 455–492.

Goshen, Zohar, and Gideon Parchomovsky. “On Insider Trading, Markets, and ‘Negative’ Property Rights in Information.” Virginia Law Review 87 (2001): 1229–1277.

Haddock, David D., and Jonathan R. Macey. “Regulation on Demand: A Private Interest Model, with an Application to Insider Trading Regulation.” Journal of Law and Economics 30 (1987): 311–352.

Hebner, Kevin J., and Takao Kato. “Insider Trading and Executive Compensation: Evidence from the U.S. and Japan.” International Review of Economics and Finance 6 (1997): 223–237.

Khanna, Naveen. “Why Both Insider Trading and Non-mandatory Disclosures Should Be Prohibited.” Managerial and Decision Economics 18 (1997): 667–679.

Loss, Louis. “The Fiduciary Concept as Applied to Trading by Corporate ‘Insiders’ in the United States.” Modern Law Review 33 (1970): 34–52.

Manne, Henry G. “Insider Trading and Law Professors.” Vanderbilt Law Review 23 (1970): 547–590.

Maug, Ernst. “Insider Trading Legislation and Corporate Governance.” European Economic Review 46 (2002): 1569–1597.

Mendelson, Morris. “The Economics of Insider Trading Reconsidered.” University of Pennsylvania Law Review 117 (1969): 470–492.

Meulbroek, Lisa K. “An Empirical Analysis of Illegal Insider Trading.” Journal of Finance 47 (1992): 1661–1699.

Pettit, R. Richardson, and P. C. Venkatesh. “Insider Trading and Long-Run Return Performance.” Financial Management 24 (Summer 1995): 88–105.

Roulstone, Darren T. “The Relation Between Insider-Trading Restrictions and Executive Compensation.” Journal of Accounting Research 41 (2003): 525–551.

Schotland, Roy A. “Unsafe at Any Price: A Reply to Manne, Insider Trading and the Stock Market.” Virginia Law Review 53 (1967): 1425–1478.

Scott, Kenneth E. “Insider Trading: Rule 10b-5, Disclosure and Corporate Policy.” Journal of Legal Studies 9 (1980): 801–818.

Smith, Frank P. Management Trading: Stock-Market Prices and Profits. New Haven: Yale University Press, 1941.

Thurber, Stephen. “The Insider Trading Compensation Contract as an Inducement to Monitoring by the Institutional Investor.” George Mason University Law Review 1 (1994): 119–134.

Wilgus, H. L. “Purchase of Shares of Corporation by a Director from a Shareholder.” Michigan Law Review 8 (1910): 267–297.

Hong Kong international stock brokers comparison table

The table below compares major Hong Kong stock brokers who can buy foreign shares. If you haven’t already done so, I recommend you begin by reading the Hong Kong international stock broker guide for an overview of what’s available and then using this table to compare firms. Further details of fees and services are listed on each stock broker’s individual page.
If you’re looking for the cheapest broker in Hong Kong to buy Hong Kong stocks, the going rate from local firms is about 0.15-0.3% with a minimum of HK$80-100. However, the lowest advertised rate is the local division of US group Interactive Brokers, at 0.088% with a minimum of HK$18, while Standard Chartered charges 0.2% online and 0.3% by phone with no minimum. See the Hong Kong discount stock broker comparison table for more.
Most Hong Kong stock brokers will accept non-resident investors. However, some will probably not do business with US citizens or residents, for reasons explained in this article.

	Markets available	Commissions	Multicurrency account	Minimum investment
BOCI Securities More details	Online: Hong Kong, USA Broker-assisted: Australia, Canada, China B, France Germany, Japan, Malaysia, Netherlands, Singapore, Sweden, Taiwan, Thailand, UK	Not disclosed	No	None
Boom Securities More details	Online: Australia, China B, Hong Kong, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, USA	Online: min ~HK$88-400	Yes	None
Core Pacific - Yamaichi More details	Online: Hong Kong Broker-assisted: Australia, Canada, China B, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, UK, USA, USA OTCBB	Online: min HK$100 Broker-assisted: min ~HK$100-1,050	Not stated	None
DBS Vickers More details	Online: Canada, Hong Kong, Singapore, USA Broker-assisted: Australia, China B, Indonesia, Japan - Tokyo, Malaysia, Philippines, Thailand, UK	Online: min ~HK$100-225 Broker-assisted: min ~HK$100-unknown	Yes	None
Haitong International Securities (Taifook Securities) More details	Online: China B, Hong Kong, USA Broker-assisted: Australia, Canada, Japan, Korea, Malaysia, Singapore, Taiwan, Thailand, UK	Online: HK$100 Broker-assisted: min ~HK$100-1,250	No	None
HSBC Bank More details	Online: Hong Kong, USA Broker-assisted: Australia, Canada, China B, Japan, UK	Online: min ~HK$100-390 Broker-assisted min: ~HK$100-850	Yes	None
Interactive Brokers More details	Online: Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, India (for NRIs only), Italy, Japan, Mexico, Netherlands, Singapore, Spain, Sweden, Switzerland, UK, USA	Online: min ~HK$8-100	Yes	US$10,000
KGI Securities More details	Online: China B, Hong Kong, Taiwan, USA Broker-assisted: Australia, Canada, France, Germany, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Thailand, UK	Online: min ~HK$100-230 Broker-assisted: min ~HK$100-HK$1150	No	None
Phillip Securities Hong Kong More details	Online: Australia, China B, Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan, Thailand, USA Broker-assisted: Canada, France, Germany, Philippines, UK	Online: min ~HK$100-380 Broker-assisted: min ~HK$250-1,200	Yes	None (HK$10,000 for applicants not opening account in person)
Polaris Securities More details	Online: China B, Hong Kong, Taiwan, USA Broker-assisted: Australia, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Switzerland, Thailand, UK, Vietnam	Online: min ~HK$100-300 Broker-assisted: min ~HK$150-850	No	None
Saxo Bank More details	Online: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece (CFDs only), Hong Kong, Italy, Japan, Netherlands, Norway, Poland, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, UK, USA	Online: min ~HK$100-250	Yes	US$10,000

Information in the Hong Kong international stock broker comparison table comes from the stock brokers’ websites and leaflets, conversations with broker staff and conversations with investors who use the services. While I try to ensure it is accurate and up-to-date, I cannot guarantee that. You should always check current terms and conditions before opening an account. If you identify any errors or omissions, please email me using the contact form.

List Of Stock Brokers In Hong Kong (China)

Boom Securities
Phillip Securities Hong Kong
Polaris Securities
Interactive Brokers
 Haitong Securities International
Saxo Bank
Wellington Management Company, LLP
Macquarie
Zeal Asset Management Limited
HuaAn Asset Management (HK) Ltd
BlackRock
JPMorgan Chase
Value Partners Limited
BNP Paribas Investment Partners Asia Limited
EFG Asset Management
RBC Investor Services
Goldman Sachs
UBS AG
Société Générale
MSCI Inc.
Ping An Trust
Sino-US United MetLife Insurance Company Ltd
Eclipse Options

Nine Ways to Invest in Hong Kong

Hong Kong is the financial center of the world. Here are some interesting facts about Hong Kong that might of interest to potential investors:

1. It is one of the two special administrative regions of the People's Republic of China, the other being Macau.
2. It was a dependent territory of the United Kingdom from 1842 to 1997.
3. It has the third highest population density in the world.
4. It is ranked 6th in terms of GDP per capital, which is higher than the U.K., France, Germany, Italy, and Japan.
5. It is ranked 22nd in term of the Human Development Index.
6. It has the highest concentration of corporate headquarters in Asia.
7. It is the wealthiest urban center in China.
8. Milton Friedman called Hong Kong a prime example of laissez-faire capitalism in practice.
9. According to the Index of Economic Freedom, it was ranked the world's freest economy for 13 years in a row.
10. It is the eleventh largest trading territory in the world.
11. The total value of imports and exports exceed its gross domestic product.
12. It has more consulates than any other city in the world.
13. The Hong Kong Stock Exchange is the fifth largest in the world.
14. It had more money raised through initial public offerings last year than any other place in the world except London.
15. It is the third-best financial center in the world, according to the Global Financial Centers Index.
16. Over 90 percent of its gross domestic product comes from services.
17. It is one of the Four Asian Tigers.

The following Hong Kong stocks trade either on the New York Stock Exchange, or the NASDAQ. Some of these companies are very large, while others are very small, and speculative.

Melco PBL Entertainment (Macau) Ltd. (MPEL) operates six Mocha Club casinos. It also has two projects under development, the Crown Macau Hotel Casino, and the City of Dreams casino. It has a P/E of 143.50, and an extremely high PEG of 163.50.

Asia Satellite Telecommunications Holdings Ltd. (SAT) provides broadcasting, telecommunications, Internet, and multimedia satellite transponder services to customers in Asia, the Middle East, Europe, and Australia. This New York Stock Exchange-traded company has a P/E of 12.74, and pays a decent yield of 3.7%.

China Netcom Group Corp. Hong Kong Ltd. (CN), provides broadband communications, and landline telecommunications services in China. This New York Stock Exchange stock, which is actually based in Beijing, has a P/E ratio of 9.4. The stock has been paying an annual dividend for the last three years.

City Telecom HK Ltd. (CTEL), provides telecommunications, Internet and pay television services throughout Hong Kong. This NASDAQ-traded company has generated negative earnings, but pays a yield of 2.2%.

CNOOC Ltd. (CEO) explores, and produces crude oil and natural gas in China. It owns four offshore oil fields in the China seas. This $44 billion company by market cap, which trades on the New York Stock Exchange, has a P/E of 10.7, and a yield of 3.3%.

Corgi International Ltd. (CRGI) , develops and sells collectible toys, gifts, and other products, including licensed toys for Batman, Disney Classics, Harry Potter, James Bond, Lord of the Rings, Pirates of the Caribbean, and Superman. This extremely low cap NASDAQ stock has generated negative earnings, and should be considered extremely speculative.

Grand Toys International Ltd. [GRIN] develops, manufactures, and sells toy and toy-related products, party goods, stationary, and accessories. around the world. This NASDAQ-traded company is very low cap, and as a result, should be considered very speculative. The company has been generating negative earnings.

Hutchison Telecommunications International Ltd. (HTX) provides mobile, and land line telecommunications services in Hong Kong, Macau, India, Israel, Thailand, Indonesia, Vietnam, Sri Lanka, and Ghana. This New York Stock Exchange stock, has an extremely high P/E of 260.43.

APT Satellite Holdings Ltd. (ATS), provides broadcasting and telecommunications satellite services to China and Asia. This stock, which has been generating negative earnings, has a very low market cap, and as a result is extremely speculative despitethe fact that it trades on the New York Stock Exchange. ASAT Holdings Ltd. (ASTT) designs, and sells semiconductors. This NASDAQ stock, which has been generating negative earnings, has a very low market cap, and is therefore extremely speculative.

Option

In finance, an option is a contract which gives the owner the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date. The seller incurs a corresponding obligation to fulfill the transaction, that is to sell or buy, if the long holder elects to "exercise" the option prior to expiration. The buyer pays a premium to the seller for this right. An option which conveys the right to buy something at a specific price is called a call; an option which conveys the right to sell something at a specific price is called a put. Both are commonly traded, though in basic finance for clarity the call option is more frequently discussed, as it moves in the same direction as the underlying asset, rather than opposite, as does the put.

Options valuation is a topic of ongoing research in academic and practical finance. For simplicity of discussion, the value of an option is commonly decomposed into two parts: The first of these is the "intrinsic value," which is defined as the difference between the market value of the underlying and the strike price of the given option. The second part depends on a set of other factors which, through a multi-variable, non-linear interrelationship, reflect the discounted expected value of that difference at expiration. Although options valuation has been studied at least since the nineteenth century, the contemporary approach is based on the Black–Scholes model which was first published in 1973.^[1][2]

Options contracts have been known for many centuries, however both trading activity and academic interest increased when, starting in 1973, options were issued with standardized terms and traded through a guaranteed clearinghouse at the Chicago Board Options Exchange. Today many options are created in a standardized form and traded through clearinghouses on regulated options exchanges, while other over-the-counter options are written as bilateral, customized contracts between a single buyer and seller, one or both of which may be a dealer or market-maker. Options are part of a larger class of financial instruments known as derivative products, or simply, derivatives

US Bonds Fall on Worries Fed Will Taper Purchases

U.S. Treasurys prices slumped on Wednesday after minutes from the Federal Reserve's March policy meeting fueled fears the U.S. central bank might slow or end its bond purchases by year-end.
The minutes of the central bank's meeting, which were released earlier than originally scheduled, showed that a few policymakers expected to slow the pace of asset purchases, currently at $85 billion a month, by mid-year and end them later this year. Several others expected to slow the pace a bit later and halt the quantitative easing program by year-end.
Stronger-than-expected Chinese import data and the U.S. stock market's advance to record highs also reduced the safe-haven appeal of Treasurys, sending longer-dated yields back to last Thursday's levels.
The market sell-off picked up speed after the Treasury sold $21 billion worth of 10-year notes at a high yield of 1.795 percent, slightly higher than the market expected.
(Read More: Fed's Dovish Contingent Will Coo Louder Than Hawks)
But some analysts said the reaction to the Fed minutes was overdone as jobs data since the March 19-20 meeting, including key March payrolls data released last Friday, have disappointed, stoking expectations for slower growth and continued Fed support.
"The payroll jobs report was the final nail in the coffin of an early halt to QE (quantitative easing) for now," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.
Benchmark 10-year Treasurys last traded 15/32 lower in price, yielding 1.803 percent from 1.752 percent late on Tuesday.
The 10-year yield moved further above its 200-day moving average and the level before the release of the March payroll report that showed a paltry gain of 88,000 jobs.
The 30-year bond was down 1-10/32 in price for a yield of 3.003 percent from 2.938 percent late on Tuesday.
On Wall Street, the Standard & Poor's 500 stock index rose to another all-time high.
BoJ Underpins Bond Support
While on track for a third straight day of losses, drops were limited by bets Japanese investors will pour money into U.S. Treasurys due to the Bank of Japan's bold $1.4 trillion asset purchase program to stimulate the economy.
BOJ Governor Haruhiko Kuroda said there would be no additional stimulus in the coming months but signaled the central bank was open to doing more to achieve faster growth.
The BOJ program was the initial catalyst for last week's Treasurys rally as traders bet Japanese banks, insurers and pension banks will increase their purchases of Treasurys and other higher-yielding foreign bonds.
But so far, there has been no surge in inflows of Japanese money into the Treasurys market, including in Wednesday's auction of 10-year notes.
"We were surprised by the overall lack of strength for the auction, as we expected Japanese investors to show up and grab duration in light of the recent BoJ QE," the Nomura U.S. rates strategy team wrote in a note to clients.
"However, we understand that flows might not come immediately, and it takes time for investors to get squeezed out."
The Treasury Department will complete this week's debt sale with a $13 billion offering of 30-year bonds on Thursday.
Investors digested the latest Federal Open Market Committee minutes much earlier than expected. The U.S. central bank released the record of the March 19-20 meeting of its policy-setting FOMC at 9 a.m. rather than the scheduled time of 2 p.m.
The Fed said it had inadvertently given the minutes to congressional aides and trade groups on Tuesday.
It is unclear whether there was unusual trading after those individuals received the minutes.
"I won't discount anything," said Robbert Van Batenburg, director of Newedge USA LLC in New York. "You don't expect the Fed to make this clumsy mistake."
The Fed said it launched an investigation of the early release of the minutes, which it said appeared to have been "entirely accidental."

US Treasury Yields

U.S. 3 Month Treasury

	Yield		Change
US 3-MO	0.074	---	UNCH
US 6-MO	0.099	---	UNCH
US 1-YR	0.129	---	UNCH
US 2-YR	0.238	---	UNCH
US 3-YR	0.355	 	-0.005
US 5-YR	0.739	---	UNCH
US 10-YR	1.808	---	UNCH
US 30-YR	3.003	---	UNCH