The Cash Market Transaction Survey 2014/15 conducted by Hong Kong Exchanges and Clearing Limited (HKEX) found that the increases in the value of overseas investor trading and Exchange Participants' (EPs') principal trading underpinned the strong growth in the value of all market trading. According to the survey findings, the contribution of investors outside Hong Kong to total trading in HKEX's securities market from October 2014 to September 2015 (2014/15) was steady at 39 per cent, while their trading value increased by 71 per cent from the previous 12-month period (2013/14), compared to an increase of only 45 per cent in trading value from local investors, whose market share fell to 39 per cent. The value of EPs' principal trading increased by 124 per cent, and its market share rose to 22 per cent.
The survey also found that institutional investors (both local and overseas) contributed 51 per cent of total trading in HKEX's securities market in 2014/15, down from 58 per cent in 2013/14, while the contribution from retail investors (both local and overseas) was 27 per cent (25 per cent in 2013/14) (see Figures 1 and 2).
Among overseas institutional and retail investors, Mainland investors were the third largest contributors after UK and US investors. Mainland investors' contribution to the market's total trading increased to 9 per cent from 5 per cent. Together with UK and US investors, they accounted for about 28 per cent of all trading. The value of Mainland investors' trading grew over 185 per cent year-on-year from a small base, reflecting, to a certain extent, the launch of Shanghai-Hong Kong Stock Connect (Stock Connect) in November 2014.
Other findings of the 2014/15 survey
- Overseas institutional investors had the biggest share of trading among the four investor types (local/overseas and retail/institutional), contributing 31 per cent of total market turnover, down from 34 per cent in 2013/14 (see Figure 1).
- Local institutional investors contributed 19 per cent to total market turnover, down from 24 per cent in 2013/14 (see Figure 1).
- Local retail investors contributed 19 per cent to total market turnover, compared to 20 per cent in 2013/14 (see Figure 1).
- Exchange Participants' principal trading increased to a record high of 22 per cent of total market turnover in 2014/15, up from 16 per cent in 2013/14 (see Figure 1).
- Investors outside Hong Kong continued to be significant contributors (see Figures 3 and 4):
- UK investors led overseas investor trading in 2014/15 with a contribution of 27 per cent (28 per cent in 2013/14), or 10 per cent of total market turnover (11 per cent in 2013/14).
- US investors, the second largest contributor group, accounted for 23 per cent of overseas investor trading in 2014/15 (down from 26 per cent in 2013/14) and 9 per cent of total market turnover (10 per cent in 2013/14).
- Mainland investors were ranked third with a contribution of 22 per cent to overseas investor trading in 2014/15 (up from 13 per cent in 2013/14) and 9 per cent to total market turnover (5 per cent in 2013/14).
- The contribution of Continental European investors was 8 per cent of overseas investor trading (10 per cent in 2013/14) and 3 per cent of total market turnover (4 per cent in 2013/14).
- European investors (including UK) in aggregate contributed 34 per cent of overseas investor trading in 2014/15 (down from 38 per cent in 2013/14).
- Asian investors (excluding Mainland China)in aggregate contributed 14 per cent of overseas investor trading in 2014/15 (down from 16 per cent in 2013/14).
- There were 18 reported origins of overseas investors in Asia and 50 reported origins of overseas investors outside Asia, Europe and the US.
- Over the past decade, trading from Mainland Chinese investors grew at a compound annual rate of 35 per cent, the highest of all individual overseas origins (see Table 1).
- Retail online trading accounted for 44 per cent of total retail investor trading (up from 38 per cent in 2013/14) and 12 per cent of total market turnover (up from 9 per cent in 2013/14) (see Figure 5).
The Cash Market Transaction Survey has been conducted annually since 1991. Each year's survey covers Hong Kong's securities market turnover for the 12-month period from October the previous year to September the following year. For the 2014/15 survey, questionnaires were sent to 487 Exchange Participants in the target population. The special Exchange Participant for Southbound trading under Stock Connect (China Investment Information Services Ltd), which was not sent a questionnaire, was included in the final data analysis. The sample from completed questionnaires represented 85 per cent by number and 90 per cent by turnover value of the target population.
The full report on the HKEX Cash Market Transaction Survey 2014/15 is available on the HKEX website.
Notes:
| 1. |
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.
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| 2. |
Overseas investors are individual/retail investors residing outside Hong Kong or institutional investors operating outside Hong Kong, with the source of funds overseas.
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| 3. |
Stock Exchange Participant, or EP, principal trading is trading on the EP firm's own account.
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| 4. |
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).
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| 5. |
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.
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| 6. |
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. |
Figure 1. Distribution of cash market trading value by investor type
(Oct 2014 – Sep 2015)
Note: Numbers may not add up to 100 per cent due to rounding.
Figure 2. Distribution of cash market trading value by investor type
(2005/06 – 2014/15)
| (a)Local vs overseas |
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(b)Retail vs institutional
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Note: Numbers may not add up to 100 per cent due to rounding.
Figure 3. Distribution of overseas investor trading value in cash market by origin
(Oct 2014 – Sep 2015)
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In 2014/15, reported origins in "Rest of Asia" were Bangladesh, Brunei, Cambodia, India, Indonesia, Kazakhstan, Kyrgyzstan, Laos, Macau, Malaysia, Mongolia, Nepal, Pakistan, Philippines, South Korea, Sri Lanka, Thailand and Vietnam.
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| * |
In 2014/15, reported origins in "Others" included Anguilla, Bahamas, Bahrain, Belize, Bermuda, Bolivia, Brazil, British Virgin Islands, Burkina Faso, Cameroon, Canada, Cayman Islands, Cook Islands, Costa Rica, Dominica, Ecuador, Grenada, Guyana, Honduras, Israel, Jamaica, Kenya, Kuwait, Lebanon, Liberia, Marshall Islands, Mauritius, Mexico, Morocco, New Zealand, Niue, Oman, Panama, Paraguay, Peru, Qatar, Russia, Samoa, Saudi Arabia, Seychelles, South Africa, St. Kitts & Nevis, Suriname, Trinidad & Tobago, Turkey, Turks & Caicos Islands, United Arab Emirates, Uruguay, Vanuatu and Venezuela. |
Note: Numbers may not add up to 100 per cent due to rounding.
Figure 4. Distribution of cash market trading value by local and overseas origin
(Oct 2014 – Sep 2015)
^ Others comprise investors from Japan, Taiwan, Rest of Asia and Rest of the World.
Note: Numbers may not add up to 100 per cent due to rounding.
Table 1. Compound annual growth rate (CAGR) in trading value
by investor type in the past decade