HKEX Report丨Cash Market Transaction Survey 2018

北大汇丰金融研究院 2021-01-21

Editor's Note

The Cash Market Transaction Survey (“CMTS”) has been conducted regularly since 1991 by HKEX to study the trading composition of the Exchange Participants (“EPs”) of the Stock Exchange of Hong Kong Limited (“SEHK”). The main objective of the survey is to understand the relative contribution of trading value in the HKEX securities market, including the Main Board and GEM, by investor type. The market share of online trading is also assessed.The last CMTS was carried out for the year ended 31 December 2016.The 2018 survey covered EPs’ transactions on both the Main Board and GEM from January to December 2018 (referred to as the 2018 study period).

Author: Chief China Economist's Office, Hong Kong Exchanges and Clearing Limited

REPORT SUMMARY

The 2018 survey covered EPs’ transactions on both the Main Board and GEM from January to December 2018 (referred to as the 2018 study period)1. The survey included Southbound trading through the specialised EPs designated for Shanghai-Hong Kong Stock Connect (launched in 2014) and Shenzhen-Hong Kong Stock Connect launched in December 2016 (collectively referred to as the “Stock Connect” scheme) in the data analysis as trading originated from investors in Mainland China. The designated EPs for the Stock Connect scheme are referred to as the “Southbound EPs”.

1.Trading value by investor type

(1) All types of trade recorded an increasein turnover value in 2018 relative to 2016 (based on implied value oftrading2).

(2) Local (Hong Kong) investors’ turnovervalue increased by 34% compared with 2016 and its contribution to total marketturnover was 30% (36% in 2016). Overseas investors’ turnover value increased by65% compared with 2016 and its contribution to the total market turnover was41% (40% in 2016).

(3) Overseas investor trading derivedmainly from institutions ― 35% of the total market turnover (33% in 2016),compared with 6% from overseas retail investors (7% in 2016).

(4) Local institutional investors contributed20% of the total market turnover (around the same level as in 2016), comparedto 10% from local retail investors (16% in 2016).

(5) Institutional investors (local andoverseas) contributed 55% to total market turnover (53% in 2016) while thecontribution from retail investors (local and overseas) was 16% (23% in 2016).The balance of 29% was taken up by EP principal trading, the highest levelreached in record.

(6) Over the past ten years3, EP principaltrading value grew at a compound annual growth rate (“CAGR”) of 22%, which wasthe highest among all types of trade, exceeding the CAGR of the total marketturnover value (7%). Overseas retail investor trading was the only other typeof trade that had a CAGR (11%) exceeding that of the total market turnovervalue, owing probably to the contribution by Mainland retail investors.

2.Overseas investor trading by origin

(7) Overseas investor trading came fromover 50 separate jurisdictions.

(8) In 2018, Mainland China investorssurpassed UK investors to become the largest contributor group, with acontribution of 28% of overseas investor trading and 12% of total marketturnover (22% and 9% respectively in 2016). US investors took over UK to becomethe second, capturing 23% of overseas investor trading and 10% of total marketturnover (20% and 8% respectively in 2016). UK investors slipped from the topto the third place capturing 17% of overseas investor trading and 7% of totalmarket turnover (23% and 9% respectively in 2016).

(9) In 2018, the contribution from ContinentalEuropean investors decreased to 10% of overseas investor trading (13% in 2016)and 4% of total market turnover (5% in 2016).

(10) The contribution from Asian investors,in aggregate, increased to 42% of total overseas investor trading in 2018 from36% in 2016 while the contribution made by European investors (including UKinvestors) in the year decreased to 27% from 36% in 2016. Following Mainland Chinainvestors, Singaporean investors continued to be the second largest contributorgroup in Asia although with a slight decrease from the previous survey year ―7% of overseas investor trading and 3% of total market turnover.

(11) The majority of investor tradingactivities from the US, UK, as well as Continental Europe (at least 86% ormore), Singapore (at least 82%), and Japan and Australia (both at least 79%)were contributed by institutional investors. Notably, the contribution to themajority of trading activities from Mainland China investors4 had shifted fromretail investors in 2016 (at least 62% in 2016 compared to at least 28% in2018) to institutional investors (at least 56% in 2018 compared to at least 23%in 2016).

(12) The total implied value of overseasinvestor trading grew by 65% in 2018 relative to 2016. In comparison, tradingfrom Mainland China investors grew strongly by 117% and that from US investorsgrew by 90%. On the contrary, trading from UK investors increased by arelatively moderate degree of 23% and that from Continental European investorsincreased by 26%. Australia, which contributed only 2% of total overseasinvestor trading, was the only specified overseas origin with a decline in tradingvalue (by 25%) in 2018 relative to 2016.

(13) Over the past ten years, the overallinvestor trading value from Asia had a CAGR of 13% compared to the CAGR of 7%in the total overseas investor trading value. In particular, trading fromMainland China and Taiwan investors recorded a CAGR of 17% and 12%respectively, while the CAGRs of those from the US, UK and Continental Europeaninvestors were below that in the total overseas investor trading value.

3.Retail online trading

(14)In 2018, retail online trading accounted for 61% of total retail investortrading compared to 47% in 2016, and 10% of total market turnover (slightlydown from 11% in 2016). In 2018, the implied value of online trading increasedby 49% relative to 2016 (compared to 61% for the total market turnover valueand 15% for retail investor trading value in the same period).

FULL REPORT

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