Local investors regain largest share of HKEx’s securities market trading 

hkex

Local investors have regained the largest share of securities market trading at Hong Kong Exchanges and Clearing Limited (HKEx), according to the findings from HKEx’s Cash Market Transaction Survey 2013/14.

The survey found local investors contributed 45 per cent of total turnover of HKEx’s securities market from October 2013 to September 2014 (2013/14), up from 38 per cent in the previous 12-month period (2012/13), and overseas investors’ contribution dropped from 46 per cent in 2012/13 to 39 per cent in 2013/14.  The survey also found institutional investors contributed 58 per cent of total market turnover value in 2013/14 (61 per cent in 2012/13), while the contribution from retail investors was 25 per cent (22 per cent in 2012/13).  (See Figures 1 and 2.)

Other findings of the 2013/14 survey

  • Overseas institutional investors had the biggest share in market trading among the four investor types (local/overseas and retail/institutional), contributing 34 per cent of total market turnover, down from 41 per cent in 2012/13 (see Figure 1).
  • Local institutional investors contributed 24 per cent to total market turnover, up from 20 per cent in 2012/13 (see Figure 1).
  • Local retail investors contributed 20 per cent to total market turnover, up from 18 per cent in 2012/13 (see Figure 1).
  • Exchange Participants’ principal trading remained at a record high of 16 per cent of total market turnover in 2013/14 (see Figure 1).
  • The US, the UK, Mainland China and the rest of Europe continued to account for most of the trading value contributed by investors from outside Hong Kong (see Figure 3):
    • UK investors led overseas investor trading in 2013/14 with a contribution of 28 per cent, up from 26 per cent in 2012/13.
    • US investors, the second largest contributors, accounted for 26 per cent of overseas investor trading in 2013/14, down from 28 per cent in 2012/13.
    • Mainland investors ranked third with a contribution to overseas investor trading of 13 per cent in 2013/14, up from 11 per cent in 2012/13.
    • The contribution of investors from Continental European investors to overseas investor trading was 10 per cent in 2013/14, down from 14 per cent in 2012/13.
    • Asian investors in aggregate contributed 29 per cent of overseas investor trading in 2013/14, up from 24 per cent in 2012/13.
    • There were 21 reported origins of overseas investors in Asia and over 43 reported origins of overseas investors outside Asia, Europe and the US.
  • Over the past decade, trading from Mainland Chinese investors grew at a compound annual rate of 28 per cent, the highest of all individual overseas origins (see Table 1).
  • Retail online trading accounted for 38 per cent of total retail investor trading (compared to 39 per cent in 2012/13) and 9 per cent of total market turnover (compared to 8 per cent in 2012/13) (see Figure 4).

 

The Cash Market Transaction Survey has been conducted annually since 1991.  Each year’s survey covers Hong Kong’ssecurities market turnover for the 12-month period from October the previous year to September the following year.  For the 2013/14 survey, questionnaires were sent to a target population of 481 Exchange Participants.  The response rate was 90 per cent by number and 97 per cent by turnover value of the target respondents.

The full report on the HKEx Cash Market Transaction Survey 2013/14 is available on the HKEx website.

Notes:

 

1. Cash market, securities market and stock market are interchangeable and refer to shares, bonds, funds, derivative warrants and other products traded on The Stock Exchange of Hong Kong Limited, a wholly-owned subsidiary of HKEx.
2. Stock Exchange Participant, or EP, principal trading is trading on the EP firm’s own account.
3. Retail online trading refers to trading originating from orders entered directly by individual/retail investors and channelled to brokers via electronic media (eg, the Internet).
4. The survey’s target respondents were EPs.  Their responses stemmed from their own understanding of their clients. HKEx had no direct access to EPs’ clients, nor could it verify their identities.
5. One of the limitations of the survey is that EPs might not know the true origins of all their client orders.  For instance, an EP might classify transactions for a local institution as such when in fact the orders originated overseas and were placed through that local institution, or vice versa.  In some cases, EPs might not be able to identify the composition of orders channelled via banks and might regard them as institutional client orders directly from the banks.  As a result, the findings may deviate somewhat from the true picture.

 

 

Figure 1.  Distribution of cash market trading value by investor type
(Oct 2013 – Sep 2014)
 

 

Note: Numbers may not add up to 100 per cent due to rounding.

 

Figure 2.  Distribution of cash market trading value by investor type
(2004/05 – 2013/14) 

 (a) Local vs overseas

 (b) Retail vs institutional

Note: Numbers may not add up to 100 per cent due to rounding.

 

Figure 3.  Distribution of overseas investor trading value in cash market by origin
(Oct 2013 – Sep 2014)

 

 

 

# In 2013/14, reported origins in “Rest of Asia” were Bangladesh, Brunei, Cambodia, India, Indonesia, Kazakhstan, Laos, Macau, Malaysia, Mongolia, Nepal, Pakistan, Philippines, South Korea, Sri Lanka, Thailand and Vietnam.
* In 2013/14, reported origins in “Others” included Anguilla, Bahamas, Bahrain, Belize, Bermuda, Bolivia, Brazil, British Virgin Islands, Canada, Cayman Islands, Cook Islands, Costa Rica, Curacao, Cyprus, Dominica, Gambia, Guatemala, Israel, Kenya, Kuwait, Liberia, Marshall Islands, Mauritius, Mexico, New Caledonia, New Zealand, Oman, Panama, Paraguay, Peru, Qatar, Russia, Samoa, Saudi Arabia, Seychelles, South Africa, St. Kitts & Nevis, Trinidad & Tobago, Turkey, United Arab Emirates, Uruguay, Vanuatu and Venezuela.

 

Note: Numbers may not add up to 100 per cent due to rounding.

 

Table 1.  Compound annual growth rate (CAGR) in trading value
by investor type in the past decade

 

Type of trade

2004/2014 CAGR

EP principal trading

25%

Overseas investor trading

16%

  Retail

25%

  Institutional

15%

Local investor trading

12%

  Retail

10%

  Institutional

14%

Retail investor trading

12%

Institutional investor trading

15%

Total market trading

15%

 
Overseas origin

2004/2014 CAGR

US

14%

Europe

13%

  UK

17%

  Europe (excluding UK)

6%

Asia

22%

  Japan

9%

  Mainland China

28%

  Taiwan

21%

  Singapore

20%

  Rest of Asia

31%

Australia*

-15% (2007/14)

Others*

15%

Total overseas investor trading

16%

*  Since Australia was spun off from “Others” during the 10-year period, CAGR for “Others” had to be interpreted with care.

 

Figure 4.  Percentage share of retail online trading value in cash market
(2004/05 – 2013/14)

Note: One EP which had a significant proportion of its total turnover as retail agency trading and reported a high percentage share of retail online trading prior to 2010/11 has not provided the percentage share of its retail online trading since 2010/11.  This EP has been excluded from the responses when calculating retail online trading in percentage and value terms since then.

Source: hkex – Local investors regain largest share of HKEx’s securities market trading

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