Stock Trading as an investment

[1] Stock are securities that entitle holders to part of the ownership of limited companies. Examples of stocks are common stocks (CS) and preferred stocks (PS).
- Voting rights:  CS-Yes,      PS-No.
- Dividends:      CS- Yes, if declared. PS- Yes, at a fixed rate.
- Priority:          CS- Lower, PS- Higher (in receiving dividends & claims upon liquidation)

[2] Common HK Stocks:
- Blue chips: CS of the largest and best-known non-foreign companies with strong financial positions.
- 2nd liners: CS that are inferior to blue chips in terms of financial strength.
- 3rd liners: CS that are inferior to blue chips & 2nd liners in terms of financial strength.
- Red chips: CS of firms that are listed in HK, incorporated outside the Mainland of China and mainly operated in the Mainland.
- H-shares: CS of firms that are listed in HK but incorporated in the Mainland of China.

[3] Factors affecting stock prices include:
- Macro-economic: Economic conditions (G/P), Interest rates (up/dn), Political situations (Stability).
- Industrial: Good/Poor Prospects.
- Firm-specific: Company performance (Good/Poor), Dividend policy (High/Low payouts).

[4] Stock exchanges are places where stocks are listed and traded. HKEx is the only stock exchange in HK.

[5] Market capitalisation refers to the market value of all the shares issued by a listed company. It can also refer to the total value of all the stocks listed on a stock exchange.

[6] HKEx has two platforms for companies to list their stocks. They are the Main Board (MB) and the Growth Enterprise Market (GEM)
- Listing requirements: MB (stricter), GEM (less strict)
- Target companies:      MB (Larger/more mature companies), GEM (smaller/younger companies)
- Investment risk:         MB (lower), GEM (Higher)

[7] HSI is the most commonly used stock market index in HK.
- The HSI comprises the largest and most liquid stocks listed on HKEx.
- By indicating general price movements of the HK stock market, the HSI can help investors make their investment decisions. It can also reflect HK's economic performance in advance.