Terry Tang, Investment Advisor
November 21, 2019
Hong Kong is an international financial center and an important financial hub in the region.  Since the handover in 1997, Hong Kong serves as a gateway to China, attracting foreign investments into the mainland.  With a population of just over 7 million, the city is consistently recognized as the third largest financial centre in the world.  The Hong Kong Stock Exchange (HKSE) is the major stock exchange of the city with market capitalization of $3,936 billion dollars1
According to data compiled by Trading View, the 10 largest stocks  by market capitalization in Hong Kong are:
1  Tencent (Technology)
2  ICBC (Bank)
3  Ping An (Insurance)
4  China Construction Bank Corp (Bank)
5  Agricultural Bank of China (Bank)
6  China Mobile (Telecommunication)
7  HSBC Holdings (Bank)
8  Bank of China (Bank)
9  Petro China (Energy)
10 China Merchants Bank (Bank)
Source: Tradingview.com (November 2019)
Hong Kong’s stock market is dominated by Chinese companies across banking, insurance, telecommunication, energy, and technology sectors.  And the Hang Seng index is viewed as a proxy for the state of the Chinese economy. The upcoming listing of the Chinese e-commerce giant Alibaba will surely have an impact on the ranking.
As for Canada, Toronto is the economic engine as well as the financial centre of the country.  In fact, Toronto is the 11th largest financial centre in the world according to Global Financial Centres Index, followed by San Francisco and Los Angeles.  The city’s stock exchange, The TMX Group, ranked 7th in the world with a market cap of $2,096 billion dollars2.  According to data compiled by Trading View, the 10 largest stocks in Canada by market capitalization are primarily dominated by financial and energy stocks:
1  Royal Bank of Canada (Bank)
2  Toronto-Dominion Bank (Bank)
3  Enbridge (Energy)
4  Bank of Nova Scotia (Bank)
5  Canadian National Railways Co. (Transport)
6  Brookfield Asset Management Inc. (Finance)
7  Suncor Energy Inc. (Energy)
8  Bank of Montreal (Bank)
9  TC Energy Corporation (Energy)
10 BCE Inc. (Telecommunication)
Source: Tradingview.com (November 2019)
The energy sector is the backbone of the Canadian economy.  As indicated above, top players include Enbridge, Suncor Energy, and TC Energy Corporation.  Historically, the Canadian dollar has been closely correlated to oil prices2, because Canada is the fourth largest oil producing country in the world, with resources centered in the province of Alberta.  In 2018, oil and gas alone has contributed $117 billion to Canada’s GDP3.
Hong Kong has a culture of prioritizing work and making money over almost everything else.  Hongkongers are well-known for highly efficient, and making “fast money” is something every Hong Kong investors want.  Unfortunately, this culture encourages making risky bets like trading speculative stocks, gold, commodities, options, and warrants, which often leads to chasing hot funds and suffer terrible losses.  It’s no accident that Hong Kong has one of the most active warrants market in the world by trading volume.
In contrast, Canadian investors are generally patient, more long-term oriented, seek reasonable return, prefer stability and avoid making risking bets.  As the Chinese proverb says, “If you enter a village, do as is customary”. Once you have become a Canadian investor, it’s time to fine-tune your expectations.
1 List of stock exchanges, Wikipedia
2 CAD and Oil: The Canadian Dollar and Oil Price Correlation, dailfx.com
3 Oil and gas is the backbone of the Canadian economy, plant.ca
The views and opinions expressed are those of the author and may not necessarily be those of Aligned Capital Partners Inc.  The content is for informational purposes only and not meant to be personalized investment advice.

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