Published On: Sun, Mar 3rd, 2013

HKEx Securities Market Survey Results

Charles Li CEO HKEx

Charles Li CEO HKEx

Hong Kong Exchanges and Clearing Limited released February 25 the findings from its Cash Market Transaction Survey 2011/12, revealing the continued diversity among investors in its securities market.

In 2011/12, overseas investors contributed 46 per cent of total market turnover value, similar to 2010/11. Local investors contributed 38 per cent, down from 42 per cent in 2010/11. Institutional investors contributed 63 per cent of total market turnover value (62 per cent in 2010/11). The contribution from retail investors was 21 per cent in 2011/12, down from 27 per cent in 2010/11 (see Figures 1 and 2).

Key findings of the 2011/12 survey

Overseas institutional investors, the largest contributors among all investor types, contributed 42 per cent of total market turnover, similar to their contribution in 2010/11 (see Figure 1).

Local institutional investors contributed 21 per cent to total market turnover, compared to 20 per cent in 2010/11 (see Figure 1).

Local retail investors contributed 17 per cent to total market turnover, down from 22 per cent in 2010/11 (see Figure 1).

Exchange Participants’ principal trading contributed a record high of 15 per cent of total market turnover in 2011/12, up from 12 per cent in 2010/11 (see Figure 1).

Findings regarding trading value by overseas investors (see Figure 3) show that:

US investors were the largest contributors to overseas investor trading in 2011/12 with a contribution of 32 per cent, up from 28 per cent in 2010/11.

UK investors, the second largest contributors, contributed 25 per cent of overseas investor trading in 2011/12, down from 27 per cent in 2010/11.

Continental European investors were ranked third with a contribution to overseas investor trading of 12 per cent in 2011/12, down from 14 per cent in 2010/11.

The contribution of investors from Mainland China to overseas investor trading was 8 per cent in 2011/12, down from 10 per cent in 2010/11.

Asian investors in aggregate contributed 21 per cent of overseas investor trading in 2011/12, compared to 22 per cent in 2010/11.

There were 16 reported origins of overseas investors in Asia and over 35 reported origins of overseas investors outside Asia, Europe and the US.

Over the past decade, trading from US investors had the highest compound annual growth rate (CAGR), 32 per cent. Trading from Mainland China investors had a CAGR of 28 per cent. Both were higher than the 26 per cent CAGR of overall overseas investor trading (see Table 1).

Retail online trading accounted for 34 per cent of total retail investor trading (up from 26 per cent in 2010/11) and 7 per cent of total market turnover (similar to that in 2010/11) (see Figure 4).

The Cash Market Transaction Survey has been conducted annually since 1991. Each year’s survey covers HKEx’s securities market turnover for the 12-month period from October the previous year to September the following year. For the 2011/12 survey, questionnaires were sent to a target population of 484 Exchange Participants. The response rate was 94 per cent by number and 98 per cent by turnover value of the target respondents.

The full report on the HKEx Cash Market Transaction Survey 2011/12 is available on the HKEx website.

Notes:

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.

Stock Exchange Participant, or EP, principal trading is trading on the EP firm’s own account.

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).

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.

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.

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