Overview of Securities Investments
Paper 8 is the technical securities-knowledge paper. It opens with the shape of the markets: equity, debt and derivatives, the main Hong Kong and global venues, the benchmark indices, and the macro factors that move prices.
Markets, indices and drivers
The equity market trades ownership (shares), the debt market trades borrowing (bonds and money-market instruments), and the derivatives market trades contracts whose value derives from an underlying asset. The Hang Seng Index (HSI) is the principal benchmark of the largest SEHK-listed companies, alongside the wider Hang Seng family and international indices. Prices are driven by interest rates, inflation, the economic cycle, exchange rates and political events; rising interest rates in particular tend to depress equity valuations.