When investing in Hong Kong stocks through Tiger Brokers’ Tiger Trade app, it’s crucial to understand the minimum trading units and the rules surrounding stock prices. These rules determine how many shares you need to trade, and understanding them can help you make more informed decisions. Let’s dive into what you need to know.
Minimum Trading Unit for HK Stocks
The minimum trading unit for stocks on the Hong Kong Stock Exchange (HKEX) is commonly referred to as “1 lot.” However, the number of shares in a single lot can vary depending on the stock. For example, some stocks may have 1 lot equivalent to 100 shares, while others may have 500, 1,000, or even 2,000 shares. The number of shares in a lot is determined by the stock’s price and the rules set by the HKEX.
Examples of Minimum Trading Units:
Tencent Holdings Ltd (0700.HK): 1 lot = 100 shares
BYD Auto (1211.HK): 1 lot = 500 shares
This means that if you wish to buy Tencent Holdings, you must purchase at least 100 shares (1 lot). Similarly, if you want to trade BYD Auto, you would need to buy at least 500 shares.
Odd Lots: What Are They?
An odd lot refers to a situation where you hold fewer shares than the standard trading unit, or lot. For example, if the minimum trading unit for Tencent Holdings Ltd is 100 shares (1 lot), but you only hold 150 shares, then 50 shares would be considered an odd lot.
Odd lots typically arise from situations such as:
Bonus issues (additional shares given to shareholders for free)
Rights issues (offering shareholders the right to buy additional shares)
In the example above, after a bonus issue or rights issue, if you end up with 150 shares of Tencent Holdings, the extra 50 shares will be considered an odd lot, which may be harder to trade on the market as odd lots generally don’t conform to the standard lot sizes.
How Odd Lots Impact Trading
Liquidity: Odd lots are often less liquid compared to whole lots, which means it might be harder to find a buyer or seller for them.
Trading Restrictions: Some brokers may have special rules for trading odd lots. It’s important to check with Tiger Brokers to understand their policies if you end up holding odd lots.
Potential for Higher Transaction Costs: In some cases, trading odd lots may incur higher transaction fees compared to standard lot trades.
What Happens if You Hold an Odd Lot?
If you end up holding an odd lot, it can happen due to actions like a bonus issue or a rights issue, which might affect the number of shares you hold. For example:
If Tencent issues a bonus share to its shareholders, you might end up with an odd lot (for instance, 150 shares instead of 100).
Similarly, if there’s a rights issue that allows you to purchase more shares, you may buy them in increments that leave you with an odd lot.
While odd lots are tradeable, they are typically less liquid, which means you might have difficulty buying or selling them at your desired price.
How to Trade HK Stocks on Tiger Trade
To start trading Hong Kong stocks on the Tiger Brokers app, follow these steps:
Open the Tiger Trade app.
Search for the HK stock you want to trade (e.g., Tencent, BYD).
Enter your trade size, remembering that the minimum is typically 1 lot (100 shares for Tencent or 500 shares for BYD).
If you hold odd lots after a corporate action, you can still trade them, but be aware of possible liquidity issues.
Review your order and confirm the transaction.
Conclusion
Understanding the minimum trading units and the concept of odd lots is crucial when investing in Hong Kong stocks via Tiger Brokers’ trading app. Remember that 1 lot can vary depending on the stock, and odd lots may arise due to corporate actions like bonuses or rights issues. While odd lots can still be traded, it’s essential to be mindful of their potential impact on liquidity and transaction costs.
By keeping these rules in mind, you can make more informed decisions and enhance your experience when trading HK stocks on the Tiger Brokers platform.
