Confidus Solutions logotype

Confidus Solutions

Hong Kong's brief overview

Hong Kong was a bastion of international trade and investment from the day of its independence back in July year 1997. Since then Hong Kong had been receiving constantly growing attention of international investors and businessmen from different parts of the world. Even despite numerous setbacks and recessions in the time of the Asian Financial Crisis as well as 2008 Global Economic Downturn, Hong Kong has turned into one of the leading global investment and business hotspots, well-known for its liberal and low taxation as well as numerous concluded free trade agreements, making Hong Kong a desirable destination for many entrepreneurs.

Below we shall provide a detailed overview of Hong Kong's economy and business environment, some ways allowing global investors granting access to local market, as well as few quite relevant risk factors to be considered at all times.

Hong Kong and the liberal free market economy

Hong Kong is often described as one of the world's biggest experiments in laissez-faire capitalism, however, there were quite a few new regulations introduced since it all started. Despite legal modernizations and newest requirements, Hong Kong is still being ranked ranked as one the freest states in the world based on the Index of Economic Freedom for every year starting from year 1995 – even before it became actually independent. Country now harbors the seventh biggest stock exchange on the globe, the largest initial public offering market in the world, and offers one of the densest concentrations of corporate office and headquarters in the Asia-Pacific area. Even more surprising is the fact that more than 8% of Hong Kong's households own more than one million United States dollars in net worth.

Based on the 2012 Wealth Report by Knight Frank Research and Citi Private Bank, Hong Kong is going to become the world's second biggest economy based on the GDP per capita by the beginning of year 2050. Simply for comparison, the United States is predicted to be fifth on the list after four largest Asian economies.

Making an investment in Hong Kong using ETFs

One of the easiest ways for global investors to gain gain access to Hong Kong's securities is through exchange-traded funds, also known as ETFs, which gives quick diversification in a security that trades on different international stock exchanges.

One of the most widely used Hong Kong ETFs is the iShares MSCI Hong Kong Index Fund (NYSE: EWH), having a 2.7 billion U.S. dollars in net assets with a grand total of 43 holdings.

Some other well-known Hong Kong ADRs include:

Advantages and risks of investing in Hong Kong

Hong Kong offers numerous advantages among with a few risks directly associated with investing, which must be carefully evaluated and kept in mind. While Hong Kong clearly represents an attractive business and investment destination, there are various risk factors that could transform it into a quite risky investment object during financial crisis.

Advantages of investing in Hong Kong include:

Risks of investing in Hong Kong include:

Things to remember when dealing with Hong Kong: