NASDAQ In Hong Kong: The StockHouse Guide
Stockhouse.com presents its definitive guide to the pilot program for trading of NASDAQ listed stocks in Hong Kong.
Hong Kong, May 26 /SHfn/
Q: What is the Pilot Program?
A: The Pilot Program is aimed at admitting securities listed overseas for trading on the Stock Exchange of Hong Kong. It is envisioned that this will eventually lead to the establishment of a globalised 24-hour trading system.
Q: When will it start, and how long will it last?
A: The pilot program is scheduled to start on May 31, and is scheduled to last for three months.
Q: Which Companies Will Begin Trading In Hong Kong As Part Of The Pilot Program?
A: For the purpose of the pilot program, seven NASDAQ listed companies will begin trading in Hong Kong. They are: Microsoft [MSFT], Intel [INTC], Cisco Systems [CSCO], Dell Computer [DELL], Amgen [AMGN], Applied Materials [AMAT] and Starbucks [SBUX].
Q: How Can I Buy These Shares?
A: Shares in the companies in the pilot program can be bought through any local brokerage, including online trading sites.
Q: I Have Heard Of Some Of These Companies But Not the Others. Who Are They?
A:
Company
Nature Of Business
Market Cap (US$mn)
Amgen
Biotechnology company
60,581
Applied Materials
Develops semiconductor wafer fabrication equipment
59,887
Cisco
World's largest networking equipment vendor
381,136
Dell
PC vendor, pioneer of the direct sales model
109,613
Intel
World's largest semiconductor maker
393,717
Microsoft
World?s largest software company
323,309
Starbucks
International coffee shop franchise
5,346
Q: Which Stock Codes Will The Companies In The Pilot Program Trade Under?
A: The companies in the pilot program have been assigned stock codes in the 4331-4430 range to differentiate them from companies on the Main Board And GEM. They are:
Amgen [4332]
Applied Materials [4336]
Cisco [4333]
Dell [4331]
Intel [4335]
Microsoft [4338]
Starbucks [4337]
Q: Will There Be Any Special Symbols To Distinguish These Stocks?
A: The stock names will have the suffix T, to show that they are not listed, but admitted to trading. Therefore, Amgen becomes Amgen-T.
Q: Which Currency Will These Stocks Trade In, US Dollars Or Hong Kong Dollars?
A: The stocks will all trade in Hong Kong dollars.
Q: What Size Board Lots Will They Trade In?
A: Board lots range from 10 to 100 shares per board lot, depending on the price of the security at the time of admission to trading.
Q: Will There Be Any Difference Between Shares Trading In The US And In Hong Kong?
A: No. The securities are interchangeable between Hong Kong and the US. Furthermore, shareholders can transfer their securities in the US for sale in Hong Kong and vice versa.
Q: Will These Companies Have To Comply With The Rules Of The Stock Exchange Of Hong Kong?
A: The securities are being admitted into the exchange for trading only, and regulation of the companies will lie with the primary exchange, in this case NASDAQ. However, trading in Hong Kong is subject to Hong Kong law and Exchange rules, including the market manipulation provisions of the Securities Ordinance.
Furthermore, while suspension and resumption of trading in the pilot program securities follows the home market, the Hong Kong SFC and the exchange have the right to suspend, halt trading and remove any security from trading.
Q: How Will Settlement Be Conducted?
A: Settlement will in Hong Kong dollars, through the Hong Kong Securities Clearing Company's (HKSCC) central clearing and settlement system. It will follow the standard T+2 settlement period.
Q: How Will Share Registration Work For Companies In The Pilot Program?
A: The companies in the pilot program do not have to appoint a share registrar in Hong Kong, and all shares are held under HKSCC's account with US Depository Trust Co. (DTC), registered in the name of Ceded & Co. Owners of these shares are not registered shareholders, but have beneficial interest in the shares.
Q: Are There Any Special Fees For Trading Stocks in The Pilot Program?
A: The transaction levy for trading stocks in the pilot program is the same as for local securities. There is no stamp duty, although there are certain extra fees, which are listed below:
Stock Maintenance fee:
Monthly charge of $0.25 per 100 shares or fewer. The fee is calculated on the daily average stock balance of pilot program securities in stock accounts of each participant and is payable monthly. No stock custody fee will be charged.
Stock withdrawal fee:
HK$600 per instruction plus out-of-pocket expenses incurred by HKSCC. The fee also applies to the withdrawal of securities entitlements accruing from pilot program securities which are not eligible securities.
Handling fee for warrant conversions, voluntary takeovers, tender offers or open offers:
HK$600 per instruction plus out-of-pocket expenses incurred by HKSCC.
Cross-border transfer fee for receipts/deliveries of pilot program securities:
HK$200 per receipt/delivery instruction plus out-of-pocket expenses charged to HKSCC by DTC in which the securities are transferred to or from HKSCC. In addition, Hong Kong shareholders may be charged a fee by their appointed agents/brokers offering this service in Hong Kong and in the US.
Q: Will Hong Kong Companies Also Begin Trading On NASDAQ?
A: While the pilot program only calls for shares in NASDAQ listed companies to begin trading in Hong Kong, it is envisioned that one day, shares in Hong Kong companies will trade on NASDAQ. However, no timetable has yet been set.
Q: Where Can I Get Further Information On The Pilot Program Stocks?
A: The Exchange has established a joint web site with NASDAQ. The site at
porttracker.nasdaq-sehk.com
will carry NASDAQ market statistics. Otherwise, financial web sites such as stockhouse.com.hk will carry news and stock prices on the companies in the pilot program.
Q: Do I have to pay US taxes on any money I make?
A: US taxpayers must pay capital gains tax. However, non-US taxpayers are exempt.
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