1.Overview
US stocks have become a popular choice for many Hong Kong investors seeking to diversify their portfolios in recent years. Unlike the Hong Kong stock market, the US stock market is primarily composed of the New York Stock Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX). It features a larger number of listed companies with exposure to the world's largest market. The US stock market is known for its high trading volumes, strong liquidity, extended pre-market and after-hours trading sessions, and potentially lower entry fees compared to the Hong Kong market.
1.1 Benefits of investing in US stocks
-
Diverse investment products: Including shares of leading US companies.
-
Minimum purchase unit: As low as one share.
-
Extended trading hours: Despite the time difference, pre-market and after-hours trading are available for up to 16 hours.
1.2 Investing in US stocks with Airstar
Extended trading hours
Access to trading for up to 16 hours on trading days.
Currency exchange
Convert currencies directly within the app.
Advanced order support
Keep orders valid until they are manually cancelled.
2.Investing basics
2.1 Key concepts
2.1.1 Three exchanges
-
New York Stock Exchange (NYSE): The oldest, largest, and most well-known stock exchange in the US, with a history spanning over 300 years. It lists companies from traditional industries such as finance, retail, and other established sectors.
-
NASDAQ Stock Market: Commonly referred to as "NASDAQ," it is an electronic securities exchange and the second-largest in the world by market capitalization. It has sometimes surpassed the NYSE in trading volume and primarily lists high-tech companies.
-
American Stock Exchange (AMEX): It is the only exchange that can trade stocks, options, and other derivatives. It mainly lists small and medium-sized enterprises (SMEs) and is also known for its active ETF trading.
2.1.2 Three indices
The Dow is the oldest stock index and includes 30 major US companies such as Microsoft (MSFT) and Coca-Cola (KO). It is known for its long history and selectivity.
The Nasdaq includes all stocks listed on the NASDAQ exchange, with a focus on high-tech and emerging industries such as internet and biotech. It is a key indicator for tech stocks.
The S&P 500 is a broad index of 500 US companies selected based on market cap and liquidity, representing a diverse range of industries.
2.1.3 ETFs
US stock ETFs are a popular choice for investors, with a diverse selection categorized by region, market capitalization, and industry. By market cap, they are categorized into total market ETFs, mid/small-cap ETFs, and large-cap ETFs, which track large companies and indices, such as VOO, IVV, and SPY.
Trading ETFs is similar to trading common stocks. You can buy and sell them through a securities account, with one lot as the trading unit. The fees and transaction charges are the same as those for regular stocks.
2.1.4 Circuit breaker
The US stock market uses a circuit breaker to manage extreme price swings. If the market or individual stocks reach set thresholds, trading is temporarily paused to control risk. This includes both market-wide and individual stock circuit breakers, with three main stages:
|
Stage
|
Trigger
|
Halt Duration
|
|
Stage 1
|
7% decline in a single trading day
|
Trading halt for 15 minutes
|
|
Stage 2
|
13% decline in a single trading day
|
Trading halt for 15 minutes
|
|
Stage 3
|
20% decline in a single trading day
|
Market closes for the day
|
2.1.5 Earnings season
January, April, July, and October are the months when most publicly traded companies release their quarterly or annual financial statements and important information.
2.1.6 Triple Witching Day
Triple Witching Day refers to the third Friday of every quarter (March, June, September, and December) in the US market. It is the expiration date for stock index futures, stock index options, and individual stock options. This day is typically marked by significant price volatility in the markets.
3.Trading rules
3.1 Trading hours
| Summer |
Winter |
| 9:30 PM to 4:00 AM (HKT) |
10:30 PM to 5:00 AM (HKT) |
3.2 Pre-market and after-hours
Pre-market and after-hours trading occur outside regular market hours and may not be supported by all banks and brokerages. Airstar does support pre-market and after-hours trading and offers advanced orders with good-till-cancelled options. You can buy or sell at a specific price without resetting the order each time.
| Summer |
Winter |
| Pre-market trading hours: 4:00 PM to 9:30 PM (HKT) |
Pre-market trading hours: 5:00 AM to 10:30 AM (HKT) |
| After-hours trading hours: 4:00 AM to 8:00 AM (HKT) |
After-hours trading hours: 5:00 AM to 9:00 AM (HKT) |
3.3 Minimum trading unit
Investors can purchase US stocks with a minimum unit of one share, making the entry cost affordable.
3.4 Trading settlement
US stocks follow a T+1 settlement cycle. Most stocks are cleared and settled one trading day after the transaction.
3.5 Holiday schedule
According to the New York Stock Exchange, the following designated holidays are observed: New Year's Day, MLK, Jr. Day, Presidents Day, Good Friday, Memorial Day, Juneteenth, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If a holiday falls on a Saturday, the exchange will be closed on the preceding Friday. If it falls on a Sunday, the exchange will be closed on the following Monday.
3.6 Quotes
BBO (Best Bid and Offer)
BBO includes: NSDQ BBO and National BBO (NBBO). Both are aggregated from all 13 US exchanges and provide real-time quotes.
Level 2 Depth of Market (DOM)
Level 2 DOM includes data from multiple exchanges such as: NYSE ArcaBook, NYSE OpenBook, Nasdaq TotalView, CBOE Direct Edge, and CBOE Bats BZX. It provides more price levels and complete order information from exchanges, all in real-time.
3.7 Trading cost
3.8 Taxes on stocks
3.8.1 Capital Gains Tax
Hong Kong investors who do not have US citizenship or a Green Card are exempt from paying US capital gains tax on profits from buying and selling US stocks. However, a completed W-8BEN form is required when opening an account.
3.8.2 Dividend Tax
Local investors are required to pay 30% tax on the dividends, which will be directly deducted from the dividend distribution.
Investment involves risks. The prices of funds may fluctuate, sometimes dramatically in a short time, and the worst case may result in the loss of your entire investment amount. Returns on investments are not guaranteed, and there is potential for financial loss. Past performance is not indicative of future performance. Before making any investment decisions, investors should review all relevant offering documents, financial statements, and risk disclosures. It is critical to evaluate one's financial status, personal circumstances, and investment objectives thoroughly to ensure the investment aligns with individual financial needs. If necessary, seek independent legal, tax, financial, and other professional advice before making any investment decisions.
