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Local retail investors in the HKEx stock market reach all-time high

13 April 2012

Category: News, Asia, Hong Kong

Retail participation in the Hong Kong stock market has reached a new high, according to the Retail Investor Survey 2011 conducted by Hong Kong Exchanges and Clearing Limited (HKEx). The survey, which was conducted during the period from 14 November to 23 December 2011, found that about 2.15 million Hong Kong adults are stock investors, i.e. individuals who invested in products on the HKEx securities market, which is a new high. This represents 35.7% of the Hong Kong adult population, higher than the 35% in 2009 and similar to the participation level in 2007. The survey found that 35.8% of Hong Kong adults are retail investors, i.e. individuals who participate in the HKEx securities or derivatives (i.e. futures and options) markets or both. The usage of online stock trading continued to grow and banks remained the major stock trading channel, the survey findings showed.
Key findings of the survey include:

(1) 35.7% of Hong Kong adults (or 2,147,000 individuals) were stock investors (individuals who at the time of the interview were holding stocks, or had traded them in the 12-month period preceding the interview). 

(2) 33.8%t of Hong Kong adults were stockowners who were holding stocks at the time of the interview. The median stockholding value among all stock investors (including non-stockowners) was HK$130,000 (US$16,748). The median number and value of listed company shareholdings among all stock investors (including non-shareowners) was four and $100,000, respectively. 

(3) About 7% of stock investors invested in warrants (i.e. were holding warrants at the time of the interview or had traded them in the 12-month period preceding the interview) and 6% invested in Callable Bull/Bear Contracts (CBBCs) (i.e. were holding CBBCs at the time of the interview or had traded them in the 12-month period preceding the interview). Collectively about 10% of stock investors invested in warrants and/or CBBCs (referred to as warrant/CBBC investors).

(4) About 2% of Hong Kong adults (or 122,000 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).

(5) Among stock investors, 82%t were stock traders (i.e. had traded stocks in the 12-month period preceding the interview).

(6) 68.7% of stock traders were online stock traders who had traded stocks via online media during the 12-month period (up from 66.9% in 2009) while 67.2% of derivatives investors were online derivatives traders who had traded derivatives via online media during the 12-month period (compared to 69.1% in 2009).

(7) 74.0% of stock traders had traded solely through banks (up from 69.8% in 2009) and 17.9% solely through broker firms (down from 19.3% in 2009). 58.7% of derivatives traders had traded solely through broker firms (up from 44.2% in 2009) and 33.7% solely through banks (down from 47.9% in 2009).

The typical Hong Kong retail stock investor during the survey period was 47 years old, with matriculation or above education, a monthly personal income of about $16,250 and a monthly household income of about $35,000. The typical Hong Kong retail derivatives investor was 40 years old, with tertiary or above education, a monthly personal income of about $22,500 and a monthly household income of about $45,000.

In median terms, stock investors traded less frequently in 2011 but with a slightly larger deal size than in 2009. The median number of stock transactions of all stock investors (including non-trading stock investors) in the 12-month period was six (compared to ten in 2009) and the median average value per stock transaction among stock traders was $40,000 (up from $35,000 in 2009). The median implied total stock transaction value per stock trader in the 12-month period was $400,000, compared to $468,000 in 2009.

For the first time, the 2011 survey asked about trading activity in warrants and CBBCs by stock investors. The median number of warrant/CBBC transactions by warrant/CBBC investors in the 12-month period was ten while the median average transaction value per transaction was $20,000.

In median terms, derivatives investors traded more frequently in 2011 than in 2009 — the median number of derivatives transactions in the 12-month period was 12 (up from ten in 2009). The average contract volume per derivatives transaction had a median of two (the same as in 2009).  The median implied total contract volume per derivatives investor in the 12-month period was 40, up from 25 in 2009.
Compared with non-online stock traders, online stock traders tended to be younger, with higher education level and higher work status. They also tended to have traded more frequently.

Stock traders who traded mainly through broker firms tended to have a similar trading pattern as those who traded mainly through banks — a median number of stock transactions of ten and a median average value per stock transaction of $40,000.

Stock investors were generally positive about most aspects of the Hong Kong stock market assessed in the survey (each with a mean score above four on a 7-point scale with one being strongly disagree and seven being strongly agree). Derivatives investors were also generally positive about the various aspects of HKEx’s derivatives market (all aspects had mean scores above 4.6).  Retail investors were also positive when asked whether “HKEx gives priority to the public interest” (a mean score of 4.47).

The Retail Investor Survey has been conducted periodically since 1989. In the Retail Investor Survey 2011, 2,303 individuals were interviewed by telephone.
 

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