Education

To invest in a listed company, you can buy shares and become a shareholder of the company. Stock is a share in the ownership of a company. As a shareholder you can get dividends and have the voting right. Stocks are classified in many ways, such as industry segment, earning

Futures and options are two types of derivatives. Their structure and the way they work are complicated, and involve leverage. They are high risk and not suitable for inexperienced investors or people who are less risk tolerant. FuturesFutures are financial contracts for underlying assets, such as stock, market index, currency

Derivative warrants (known as “Warrants”), inline warrants and Callable Bull/Bear Contracts (CBBCs) are all listed structured products in the Hong Kong Exchanges and Clearing Limited (HKEX). Structured products are derivatives products that have the following characteristics: Structured products are linked to specific asset(s) (or underlying asset(s)) which

Similar to stocks, exchange-traded funds (ETFs) are open-ended funds listed and traded on stock exchanges. Broadly speaking, ETFs fall into two categories: passive or active. Passive ETFs aim to track an underlying index, which can be a stock market, a group of regional or global stock markets, or an industry

Bonds are debt instruments, or agreements to repay capital plus interest on set dates. They are issued by companies or governments (bond issuers) to raise money. As an investor, you are, in effect, lending money to a company or government. Bonds are both listed and unlisted. You can buy bonds

The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E.

The operating cash flow ratio is calculated by dividing operating cash flow by current liabilities. Operating cash flow is the cash generated by a company's normal business operations. The operating cash flow ratio is a measure of how readily current liabilities are covered by the cash flows generated from a

Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal to a company’s assets minus its debt, ROE is considered the return on net assets. ROE is considered a measure of a corporation's profitability in relation

The price-to-sales ratio (Price/Sales or P/S) is calculated by taking a company's market capitalization (the number of outstanding shares multiplied by the share price) and divide it by the company's total sales or revenue over the past 12 months. The lower the P/S ratio, the more attractive

To get the market's view on a company, you may need to look at another tool - the price/earnings (P/E) ratio. Take the share price, divide it by the EPS, and you have the P/E ratio. The current P/E ratios are published in the stock price

What is a dividend?It's the share of the profits paid to the shareholders. The amount is usually expressed as cents per share. Like earnings, the history of dividend payments can be a guide to the efficiency of a company. What do I need to know about dividends?That depends

DiversificationAvoid putting all your money into a single investment or a single type of investment (e.g. stocks or properties). An investment portfolio with diversified asset allocation based on your investment objective, time horizon and risk tolerance can reduce risk and help you achieve your investment objective over the medium

How does technical analysis differer from fundamental analysis?Fundamental analysis concentrates on the underlying numbers that can affect investment decisions. These include profit and loss accounts, balance sheets, cash flow statements, net asset values, price earnings ratios, returns on equity and various other ratios used to evaluate the health of

Remember that there is no such thing as a risk-free investment. A sensible investor will understand that there is no shortcut or guarantee of gains. In any kind of investment, the level of return is always associated with the level of risk. While it is impossible to avoid risk entirely

How do I avoid risks?You cannot totally avoid risks. But you can control your exposure to risks to an acceptable level. This doesn't mean sticking to dull investments - it means making sure you understand exactly what you are investing in and recognise the potential problems. Once you have

Relative Strength Index (RSI) shows the internal strength of a stock over a given time period, say 14 days. The RSI ranges between 0 and 100. Analysts usually look for a divergence in which the stock trends upward while the RSI trends downward, and vice versa. Prices are expected to

The golden cross is a chart pattern that is a bullish signal in which a relatively short-term moving average crosses above a long-term moving average. The golden cross is a bullish breakout pattern formed from a crossover involving a security's short-term moving average (such as the 50-day moving average) breaking

Stock Price Tick Size Max. Return Rate per Tick Highest Stock Price Minus Tick Size Min. Return Rate per Tick From 0.01 to 0.25 0.001 10.00% 0.249 0.402% Higher than 0.25 to 0.5 0.005 2.00% 0.495 1.010% Higher