Investor Presentaiton
Who Invest in HKEX's Markets?
In the cash market, local retail investors have been the dominant group but are
sensitive to market conditions; overseas institutional investors have a growing
significance.
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Local retail investors have been major contributors to HKEx cash market over
the last decade. They contributed the largest proportion of market turnover
value among all types of investor until 2000³. Since 2000, their dominant
position has been taken over by overseas institutional investors. By 2003, local
retail investor contributed less than one-third of total cash market turnover.
Over a long historical time frame (more than a decade), overseas investors
(predominantly institutions) have shown a gradual rising trend of participation
in the Hong Kong cash market. Their percentage contribution rose from about
one-quarter in early 1990s to about 40% in recent years (Chart 1).
Compared to institutional investors, retail investors are much more sensitive to
changes in market sentiment. Compared to institutional trading, retail trading
value contracted to a much greater extent during bearish times and expanded to
a much greater extent during bullish times. For example, compared to the year
1997/98, retail trading value expanded by 86% (vis-à-vis 34% for institutional
trading) in 1999/2000 when the market was bullish and relative to this level
contracted by 52% (vis-à-vis 20% for institutional trading) in 2001/02 when the
market became bearish 4. The relatively stable contribution of institutional
investors is probably because they are mostly fund managers who even in
bearish times need to invest their money somehow for the beneficial owners or
readjust their portfolios and will not totally retreat from the stock market.
However, in bearish times retail investors may be discouraged from trading or
withdraw all their investment from the stock market.
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Source for analysis: CMTS; survey period covered October to September the following year.
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Other types include local institutional investors, overseas retail and institutional investors, and
Exchange Participants (or brokers) themselves.
The comparison used implied trading values based on actual turnover value during the survey periods
and percentage contribution by investor type as obtained from the surveys.View entire presentation