A recent survey carried out by Hong Kong Exchanges and Clearing Limited. (HKEx) shows that overseas institutional investors and local retail investors continue to be the major contributors to the turnover in the HKEx stock market, while the contribution from local institutional investors has increased.

The Cash Market Transaction Survey 2001/02 reveals that, for the period from October 2001 to September 2002, local investors contributed 56 per cent of total market turnover value, while overseas investors, mainly institutional investors, contributed 37 per cent. The remaining 7 per cent was from Stock Exchange Participants' (EPs) principal trading (trading on the firm's own account). Local retail investors contributed 32 per cent of total market turnover value (down from 36 per cent the previous year) and local institutional investors contributed 24 per cent (up from 19 per cent the previous year). Overseas institutional investors contributed 35 per cent of total market turnover value and overseas retail investors 2 per cent.

United Kingdom and United States investors remained the major overseas players, contributing respectively 28 per cent and 23 per cent of overseas agency trading (agency trading referred to trading on behalf of the firm's clients, including client trading channelled from the firm's parent or sister companies), down from 33 per cent and 29 per cent the previous year. Meanwhile, a larger share (23 per cent) came from European (excluding United Kingdom) investors than the previous year (14 per cent). Investors from the whole Asia region (excluding Hong Kong) contributed 20 per cent of overseas agency trading, up from 18 per cent the previous year.

The survey also assessed online trading in HKEx's stock market. During the study period, 8 per cent of retail agency trading or (3 per cent of total market turnover) was channelled online, up from 6 per cent in 2000/01 and 2 per cent in 1999/2000.

In the survey, EPs in the target population were divided into three groups with equal shares by turnover value - large-sized brokers (8), medium-sized brokers (23) and small-sized brokers (428). Almost half of local agency trading (48 per cent) was handled by small-sized brokers, while overseas agency trading was mainly processed through large- and medium-sized brokers (43 per cent each). The majority of trading from the United States (61 per cent) and the United Kingdom (48 per cent) came through large-sized brokers and the majority of trading from the rest of Europe (62 per cent) through medium-sized brokers.

HKEx conducted the annual Cash Market Transaction Survey since 1991 (formerly by Stock Exchange of Hong Kong). For the 2001/02 survey, questionnaires were sent to a target sample which included all large- and medium-sized brokers and a random sample covering 60 per cent of small-sized brokers in the target population. Out of the 309 questionnaires sent, 289 completed questionnaires were received. The response rate was 94 per cent by number or 95 per cent by turnover value of respondents. The findings are projected from the implied percentage shares of the different types of trade in the target population.

The full report on the Cash Market Transaction Survey 2001/02 is available on the HKEx website ( http://www.hkex.com.hk/eng/stat/research/cmts/cmtspi.htm).