HKEx: Survey Shows That Retail Participation Reaches Historical High

A survey conducted by Hong Kong Exchanges and Clearing Limited (HKEx) in October 2004 revealed that the number of Hong Kong retail stock investors has reached a historical high of 1.4 million.

The Retail Investor Survey 2004 revealed that:

24.4 per cent of Hong Kong adults (or 1,354,000 individuals) were stock investors who at the time of the interview were holding stocks traded on the HKEx securities market (including shares, warrants and Exchange Traded Funds) or had traded them in the 12 months preceding the interview. The proportion increased from 17.5 per cent in December 2003 and is the highest recorded percentage since the survey series began in 1989.
1.4 per cent of Hong Kong adults (or 80,000 individuals) were derivatives investors 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 months preceding the interview. The figure was down from 2.5 per cent in 2003¹.
24.6 per cent of Hong Kong adults (or 1,360,000 individuals) were retail investors, who were either stock investors or derivatives investors, or both.

The typical Hong Kong retail stock investor is a 42-year-old white-collar worker with upper secondary or above education and a monthly personal income of about $18,750. The typical Hong Kong retail derivatives investor is a 42-year-old white-collar worker, with tertiary or above education and a monthly personal income of about $27,500.

The median number of stock transactions by stock investors during the 12 months ending October 2004 was four, the same as in 2003. The average value per stock transaction by stock investors had a median of $30,000. The implied total stock transaction value during the 12-month period had a median of $150,000. In aggregate, the implied total transaction value from all stock investors in Hong Kong was $2,245 billion during the 12-month period ².

The median number of derivatives transactions by derivatives investors during the 12 months ending October 2004 was 10, up from five in 2003. The average number of contracts per derivatives transaction by derivatives investors had a median of two. The implied total contract volume during the 12-month period had a median of 30. In aggregate, the implied total contract volume from all derivatives investors in Hong Kong was 12 million contracts during the 12-month period ².

Twenty-six per cent of stock investors were online stock traders who had traded stocks via online media during the 12-month period ending October 2004, either always or sometimes, up from 21 per cent in 2003. Twenty-nine per cent of derivatives investors were online derivatives traders who had traded derivatives via online media during the 12-month period ending October 2004, either always or sometimes. The proportion was up from 26 per cent in 2003.

Compared to non-online stock traders, online stock traders comprise a larger proportion of males, younger persons, individuals with higher education level, higher work status and higher monthly personal income.

Stock investors were generally positive about the following stock market aspects:

There was good trading information available (76 per cent agreed vs six per cent disagreed).
The market was fair and orderly (69 per cent agreed vs 10 per cent disagreed).
There were enough good quality listed companies available for investment (67 per cent agreed vs 10 per cent disagreed).
The regulation of stock brokers was effective (59 per cent agreed vs 12 per cent disagreed).
The regulation of listed companies was effective (56 per cent agreed vs 18 per cent disagreed).

Stock investors were moderately positive about the following stock market aspects:

Stock investors were well-protected (50 per cent agreed vs 25 per cent disagreed).
Listed companies had good disclosure of information (49 per cent agreed vs 20 per cent disagreed).
The regulation of insider trading was effective (40 per cent agreed vs 26 per cent disagreed).

Derivatives investors were mostly positive about the derivatives market aspects:

Regulation of HKEx derivatives brokers was effective (58 per cent agreed vs eight per cent disagreed).
The HKEx derivatives market was a fair and orderly market (55 per cent agreed vs 22 per cent disagreed).
There was good trading information available in the HKEx derivatives market (54 per cent agreed vs 19 per cent disagreed).
HKEx derivatives investors were well-protected (52 per cent agreed vs 24 per cent disagreed).

Retail investors were mostly positive about HKEx giving priority to the public interest (52 per cent agreed vs 18 per cent disagreed).

The Retail Investor Survey has been conducted periodically since 1989. In the Retail Investor Survey 2004, 2,535 individuals were interviewed by telephone.

A full report of the Retail Investor Survey 2004 and reports on past surveys are available on the HKEx website at: http://www.hkex.com.hk/research/research.htm.

Attached are selected findings of the survey presented in charts.

¹ It should be noted that the statistics on derivatives investors are subject to relatively large error due to the small size of the sample of derivatives investors.

²Please refer to the survey report for detailed calculation method.