The "gains" vs "income" criteria is not exclusive of HK. In Singapore it was the same and it's equivalent to what they have in Germany for "long term holding".

It's a totally arbitrary principle, but at least in Germany I think it's clearly established with a known period of time (one year I think it is). In Singapore it was like everything else, "to the discretion of the authorities".

The theory is that if you're something like a high frequency intraday trader, they'll say you are actually "working", so you're subject to income tax. If you're a swing trader, or a cycle trader, and make significant amounts sporadically, they can also arbitrarily say you're deriving too much of your income from that, and again, subject you to income tax. The bottom line is that they simply will not allow a plebs to get away with beating the market -- that's for their cronies and insiders only.