Interest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price.
A value-weighted index compiled by the Stock Exchange of Hong Kong based on all common stocks listed there.
Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.
The lowest price at which a dealer is willing to sell a given security.
A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards - these issues are very similar to mortgage-backed securities.
The exercise price of a derivative that is closest to the market price of the underlying instrument.
The automated trading system employed by the Stock Exchange of Hong Kong for the matching and execution of transaction in listed securities.
One hundredth of 1%. A measure normally used in the statement of interest rate eg, a change from 5.75% to 5.81% is a change of 6 basis points.
Unfavourable markets associated with falling prices and investor pessimism.
The difference between a dealer's bid and ask price.
The highest price offered by a dealer to purchase a given security.
Blue chips are unsurpassed in quality and have a long and stable record of earnings and dividends. They are issued by large and well-established firms that have impeccable financial credentials.
Publicly traded long-term debt securities, issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal at maturity.
The amount of stockholders' equity in a firm equals the amount of the firm's assets minus the firm's liabilities and preferred stock.
Individuals licensed by stock exchanges to enable investors to buy and sell securities.
The commission charged by a broker.
Favourable markets associated with rising prices and investor optimism.
The right to buy the underlying securities at a specified exercise price on or before a specified expiration date.
Bonds that give the issuer the right to redeem the bonds before their stated maturity.
The amount by which the proceeds from the sale of a capital asset exceed its original purchase price.
The market in which long-term securities such as stocks and bonds are bought and sold.
The automated system employed by the Hong Kong Securities Clearing Company Limited (HKSCC) for the clearance and settlement of securities transactions.
An electronic depositions and clearing system operated by The Hong Kong Monetary Authority which acts as the clearing agent and central custodian for Exchange Fund paper and other debt instruments.
Savings instrument in which funds must remain on deposit for a specified period, and premature withdrawals incur interest penalties.
A stock in a company whose assets or earnings have significant exposure in China.
A fund with a fixed number of shares issued, and all trading is done between investors in the open market. The share prices are determined by market prices instead of their net asset value.
A specific asset pledged against possible default on a bond. Mortgage bonds are backed by claims on property. Collateral trusts bonds are backed by claims on other securities. Equipment obligation bonds are backed by claims on equipment.
Short-term and unsecured promissory notes issued by corporations with very high credit standings.
Equity investment representing ownership in a corporation; each share represents a fractional ownership interest in the firm.
Interest paid not only on the initial deposit but also on any interest accumulated from one period to the next.
A note which must accompany every security transaction which contains information such as the dealer's name (whether he is acting as principal or agent) and the date of contract.
Any person who is, or group of persons who together are, entitled to exercise or control the exercise of 35% (or such lower amount as may from time to time be specified in the Hong Kong Codes on Takeovers and Mergers and Share Repurchases as being the level for triggering a mandatory general offer) or more of the voting power at general meetings of the issuer, or who is or are in a position to control the composition of a majority of the board of directors of the issuer.
A bond with an option, allowing the bondholder to exchange the bond for a specified number of shares of common stock in the firm. A conversion price is the specified value of the shares for which the bond may be exchanged. The conversion premium is the excess of the bond's value over the conversion price.
Long-term debt issued by private corporations.
The feature on a bond that defines the amount of annual interest income.
The number of coupon payments per year.
The annual rate of interest on the bond's face value that a bond's issuer promises to pay the bondholder. It is the bond's interest payment per dollar of par value.
Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.
An assessment of the likelihood of an individual or business being able to meet its financial obligations. Credit ratings are provided by credit agencies or rating agencies to verify the financial strength of the issuer for investors.
A monetary system in which the monetary base is fully backed by foreign reserves. Any changes in the size of the monetary base has to be fully matched by corresponding changes in the foreign reserves.
A return measure that indicates the amount of current income a bond provides relative to its market price. It is shown as: Coupon Rate divided by Price multiplied by 100%.
Registration of securities in the name of the person to whom the dealer is accountable, or in the name of the dealer's nominee; plus deposition of securities in a designated account with the dealer's bankers or with any other institution providing custodial services to the Securities and Futures Commission's satisfaction.
The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner.
Warrants issued by a third party which grant the holder the right to buy (sell) the shares of a listed company at a specified price.
Financial instrument whose value depends on the value of another asset.
A transaction effected on the Stock Exchange of Hong Kong (SEHK) in which a SEHK member acts for both buyer and seller.
A bond selling below par, as interest in-lieu to the bondholders.
The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.
A measure of bond price volatility, it captures both price and reinvestment risks to indicate how a bond will react to different interest rate environments.
The total profits of a company after taxation and interest.
The amount of annual earnings available to common stockholders as stated on a per share basis.
The ratio of earnings to price (E/P). The reciprocal is price earnings ratio (P/E).
Ownership of the company in the form of shares of common stock.
Warrants issued by a company which give the holder the right to acquire new shares in that company at a specified price and for a specified period of time.
A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment (usually two days before the record date). For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is usually indicated in newspapers with an (x) next to the stock's or unit trust's name.
The value of a financial instrument as stated on the instrument. Interest is calculated on face/nominal value.
Investment vehicles that offer a fixed periodic return.
Bonds bearing fixed interest payments until maturity date.
Bonds bearing interest payments that are tied to current interest rates.
Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates and risk evaluation of the firm.
The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest.
The amount to which a stream of equal cash flows that occur in equal intervals will grow over a period of time when it is placed in an account paying compound interest.
A commitment to deliver a certain amount of some specified item at some specified date in the future.
All H-Share companies listed on the Stock Exchange of Hong Kong are included in the Hang Seng China Enterprise Index to reflect the stock price performance of companies listed in Hong Kong and incorporated in mainland China.
The Hang Seng Index is capitalisation-weighted index of 33 companies that represent approximately 70 per cent of the total market capitalisation of the Stock Exchange of Hong Kong.
A value-weighted index of Hong Kong companies listed on The London Stock Exchange.
A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.
Rate that most creditworthy banks charge one another for large loans of Hong Kong dollars in the Hong Kong market.
The statutory body established in 1993 that has the responsibility of maintaining currency stability, managing the Exchange Fund, and regulating banks and other authorized institutions.
The recognised clearing house that operates Hong Kong's central securities clearing system (CCASS).
The share of a Chinese enterprise listed directly on the Stock Exchange of Hong Kong.
Futures contracts settled in cash according to the closing value of the Hang Seng Index.
The amount of money an individual receives in a particular time period.
A mutual fund that holds shares in proportion to their representation in a market index, such as Hang Seng Index, S&P 500.
An event where a company sells its shares to the public for the first time. The company can be referred to as an IPO for a period of time after the event.
Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information.
The illegal use of non-public information about a company to make profitable securities transactions
The difference of the exercise price over the market price of the underlying asset.
A vehicle for funds expected to increase its value and/or generate positive returns.
A person who carries on a business in Hong Kong which provides investment advice with respect to securities and is registered with the Securities and Futures Commission as an investment adviser.
The price of share set before being traded on the stock exchange. Once the company has gone Initial Public Offering, the stock price is determined by supply and demand.
High-risk securities that have received low ratings (ie, Standard & Poor's BBB rating or below; or Moody's BBB rating or below) and as such, produce high yields, so long as they do not go into default.
Financial ratios that measure the amount of debt being used to support operations and the ability of the firm to service its debt.
An order to buy (sell) securities which specifies the highest (lowest) price at which the order is to be transacted.
The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions.
The ability to convert an investment into cash quickly and with little or no loss in value.
Quotation of the Initial Public Offering company's shares on the stock exchange for public trading.
The date on which Initial Public Offering stocks are first traded on the stock exchange by the public
A notice to a customer that he/she must provide money to satisfy a minimum margin requirement set by the Exchange or by the broking firm.
The product of the number of the company's outstanding ordinary shares and the market price of each share.
A dealer who maintains an inventory in one or more stocks and undertakes to make continuous two-sided quotes.
An order to buy or an order to sell securities which is to be executed at the prevailing market price.
Market in which short-term securities are bought and sold.
A company that invests in and professionally manages a diversified portfolio of securities and sells shares of the portfolio to investors.
The underlying value of a share of stock in a particular mutual fund; also used with preferred stock.
An offer to the public by, or on behalf of, the holders of securities already in issue.
The offer of new securities to the public by the issuer or by someone on behalf of the issuer.
There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.
An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.
A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.
When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public's perception of the business potential of the IPO company.
A bond selling at par (ie, at its face value).
The face value of a security.
Bonds which have no maturity date.
Obtaining subscriptions for, or the sale of, primary market, where the new securities of issuing companies are initially sold.
A collection of investment vehicles assembled to meet one or more investment goals.
A corporate security that pays a fixed dividend each period. It is senior to ordinary shares but junior to bonds in its claims on corporate income and assets in case of bankruptcy.
The difference of the market price of a warrant over its intrinsic value.
Bond selling above par.
The amount to which a future deposit will discount back to present when it is depreciated in an account paying compound interest.
The amount to which a stream of equal cash flows that occur in equal intervals will discount back to present when it is depreciated in an account paying compound interest.
The measure to determine how the market is pricing the company's common stock. The price/earnings (P/E) ratio relates the company's earnings per share (EPS) to the market price of its stock.
The sale of government-owned equity in nationalised industry or other commercial enterprises to private investors.
Requirements which the Stock Exchange of Hong Kong members must follow when dealing in securities.
A detailed report published by the Initial Public Offering company, which includes all terms and conditions, application procedures, IPO prices etc, for the IPO
The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.
A percentage showing the amount of investment gain or loss against the initial investment.
The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.
A company incorporated and listed in Hong Kong whose controlling shareholders are Chinese entities.
The value of a bond when redeemed.
The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.
A stock's price that changes over a period of time relative to that of a market index such as the Standard & Poor's 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.
An arrangement in which a security is sold and later bought back at an agreed price and time.
A price at which sellers consistently outnumber buyers, preventing further price rises.
Amount of investment gain or loss.
An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
Risk-averse describes an investor who requires greater return in exchange for greater risk.
Risk-neutral describes an investor who does not require greater return in exchange for greater risk.
Risk-taking describes an investor who will accept a lower return in exchange for greater risk.
The statutory body established in 1989 under the Securities and Futures Commission Ordinance that is responsible for, among other things, the regulation of the securities and futures industry in Hong Kong.
An employee of a securities dealer who performs any of the functions of a securities representative dealer and is registered with the Securities and Futures Commission as a securities representative.
See The Stock Exchange of Hong Kong.
A bond that has priority over other bonds in claiming assets and dividends.
A transaction that protects the value of an asset held by taking a short position in a futures contract.
Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receives from the broker the proceeds of a sale.
Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.
The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.
The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.
Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.
An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.
A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.
A price at which buyers consistently outnumber sellers, preventing further price falls.
A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)
The exchange company recognised by the Securities and Futures Commission to establish, operate and maintain a stock market in Hong Kong.
The duration of time an investment is intended for.
The official dealing hours of the Stock Exchange of Hong Kong are from 9:30 am to 12:00 noon and 1:00 pm to 4:00 pm every Monday to Friday. Pre-opening Session starts from 9:00am to 9:30 am.
Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.
A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.
The security subject to being purchased or sold upon exercise of the option contract.
Compensation fund which covers direct claims from investors.
Process by which an investor determines the worth of a security using risk and return concept.
An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.
Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.
The compound annual rate of return earned by an investment
The rate of return yield by a bond held to maturity when both compound interest payments and the investor's capital gain or loss on the security are taken into account.
A bond with no coupon that is sold at a deep discount from par value.