One In Three Hong Kong Adults Invests In Stock Market

by Carla Johnson, Investors Offshore.com

11 July 2008

A survey conducted by Hong Kong Exchanges and Clearing Limited (HKEx) during the period from 16th November, 2007, to 15th January, 2008, revealed that one in three adults in Hong Kong are stock investors.

Retail investors - individuals who participate in the stock or derivatives markets of HKEx or both - have risen to 35.8% of the adult population, up from 28.8% in 2005, according to the survey.

The Retail Investor Survey 2007 revealed that:

• 35.7% of Hong Kong adults (or 2,022,000 individuals) were stock investors (individuals who at the time of interview were holding stocks, ie HKEx cash, or securities, market products, or had traded them in the 12-month period preceding the interview).
• 32.4% of Hong Kong adults were stockowners who were holding stocks at the time of interview. The median stockholding value was HKD100,000.
• About 20% of stock investors (or 7% of the adult population) invested in warrants (ie were holding warrants at the time of interview or had traded them in the 12-month period preceding the interview).
• 1.6% of Hong Kong adults (or 93,000 individuals) were derivatives investors (individuals who at the time of the interview were holding futures or options traded on the HKEx derivatives market or had traded them in the 12-month period preceding the interview).
• Collectively, 35.8% of Hong Kong adults (or 2,024,000 individuals) were retail investors who were either stock investors or derivatives investors, or both.
• Among stock investors, 85.7% were stock traders (ie had traded stocks in the 12-month period preceding the interview).
• 58.8% of stock traders were online stock traders who had traded stocks via online media during the 12-month period (up from 38.5% in 2005) while 49.2% of derivatives investors were online derivatives traders who had traded derivatives via online media during the 12-month period (up from 37.5% in 2005).
• 62.9% of stock traders had traded solely through banks (up from 59.1% in 2005) and 22.6% solely through broker firms (down from 30.8% in 2005). About 48% of derivatives traders had traded solely through broker firms (up from 41.2% in 2005) and 36.7% solely through banks (down from 48.5% in 2005).

The typical Hong Kong retail stock investor during the survey period was a 42 year-old, with upper secondary or above education, a monthly personal income of about HKD22,500 and a monthly household income of about HKD35,000.

The typical Hong Kong retail derivatives investor was a 42 year-old, with matriculation or above education, a monthly personal income of about HKD35,000 and a monthly household income of about HKD55,000.

Stock investors traded more frequently in 2007 than in 2005 - the median number of stock transactions during the 12-month period in 2007 was 10, up from five in 2005. For stock traders only (ie excluding those who had not traded), the median number of stock transactions was 15; the average value per stock transaction during the 12-month period for a stock trader had a median of HKD35,000. The median implied total stock transaction value per stock trader during the 12-month period was HKD500,0004, up from HKD340,000 in 2005.

Derivatives investors also traded more frequently in 2007 than in 2005 - the median number of derivatives transactions during the 12-month period in 2007 was 10, up from six in 2005. The average contract volume per derivatives transaction during the 12-month period for a derivatives investor had a median of two, compared to three in 2005. The median implied total contract volume per derivatives investor during the 12-month period was 40, higher than the 24 in 2005.

Compared to non-online stock traders, online stock traders tended to be younger, with higher education level and higher work status. They also tended to have a higher stockholding value and to have traded more frequently.

Stock traders who traded mainly through broker firms tended to have a higher stockholding value, to have traded more frequently and with a higher deal size than those who traded mainly through banks.

Stock investors were generally positive about the various aspects of the Hong Kong stock market (all aspects had mean scores above 4 on a 7-point scale with 1 being strongly disagree and 7 being strongly agree). Derivatives investors were also generally positive about the various aspects of HKEx's derivatives market (all aspects had mean scores close to 5). Retail investors were also positive when asked whether "HKEx gives priority to the public interest".

The Retail Investor Survey has been conducted periodically since 1989. In the Retail Investor Survey 2007, 2,292 individuals were interviewed by telephone.

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