Retail Investors More Active In Hong Kong Markets

by Mary Swire, Tax-News.com, Hong Kong

21 June 2006

A survey conducted by Hong Kong Exchanges and Clearing Limited (HKEx) in December 2005 revealed that the retail investor participation rate in the HKEx stock market has risen to more than 28% of the adult population, from 24 per cent in 2004.

Commentators suggest that this is likely to be due to a number of large IPOs carried out by Mainland companies, and that the trend will continue in 2006.

The Retail Investor Survey 2005 revealed that 28.6% of the adult population (or 1,618,000 individuals) were stock investors (individuals who at the time of the interview were holding stocks - including shares, warrants, Exchange Traded Funds and Real Estate Investment Trusts - in the HKEx securities market or had traded them in the 12 months preceding the interview). 23.6% were stock traders (stock investors who had traded stocks during the 12 months preceding the interview).

2.4% (or 135,000 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 months preceding the interview).1

28.8% of the Hong Kong adult population (or 1,631,000 individuals) were retail investors, who were either stock investors or derivatives investors, or both.

38.5% of stock traders were online stock traders who had always or sometimes traded stocks via online media during the 12-month period, up from 35.8% in 2004.

37.5% of derivatives investors were online derivatives traders who had always or sometimes traded derivatives via online media during the 12-month period, up from 29.3% in 2004.

59% of stock traders traded solely through banks, up from 46% in 2001.

The typical Hong Kong retail stock investor was a 42 year-old white-collar worker, with upper secondary or above education, a monthly personal income of about $18,750 and a monthly household income of about $35,000.

The typical Hong Kong retail derivatives investor was a 42 year-old white-collar worker with tertiary or above education, a monthly personal income of about $22,500 and a monthly household income of about $45,000.

The median number of stock transactions by stock investors during the 12-month period was five, compared to four in 2004. For stock traders only, the median number of stock transactions was 10; the average value per stock transaction had a median of $40,000; and the median implied total stock transaction value per stock trader during the 12-month period was $340,000.

The median number of derivatives transactions by derivatives investors during the 12-month period was six, less than the 10 in 2004.3 The average contract volume per derivatives transaction had a median of three, compared to two in 2004. The median implied total contract volume per derivatives investor during the 12-month period was 24, less than the 30 in 2004.

Compared to non-online stock traders, online stock traders comprised a larger proportion of individuals with higher education level, higher work status, higher monthly personal income and higher monthly household income.

Stock traders who traded mainly through broker firms tended to trade more frequently than, but with a similar deal size to, those who traded mainly through banks.

Stock investors were generally positive about the HKEx stock market and showed a higher degree of satisfaction than in 2004. Derivatives investors were generally net positive about the HKEx derivatives market. Compared to 2004, a larger proportion of retail investors agreed that "HKEx gives priority to the public interest".

The Retail Investor Survey has been conducted periodically since 1989. In the Retail Investor Survey 2005, 2,455 individuals were interviewed by telephone.

Recommended