An overview of regulations that protect real estate stocks, reits and derivative investors in Hong Kong

Abstract

All investors seek to make money. The repeated financial crises in recent years not only caused many people to lose their money; it also reminds us of the importance of financial regulations to reduce investors’ losses due to improper business activities in a company or stock market. Together with London and New York, Hong Kong is one of the best known financial markets in the world. Real estate investment does not rest on direct investments in hotels, residential units, or the stock market. In this decade, Real Estate Investment Trusts (REITs) and derivatives provide a new source of investment. Yet, the huge volume of transactions coupled with increasingly complicated investment tools also implies that the rules of the legal system affect many people. While many European countries and China follow civil law systems, Hong Kong follows a common law system. Judge-made law forms one of the major sources of law and lays down the important rules on indirect real estate investment. The code of practice and legislation also provide a framework for investors and entrepreneurs.