The Cash Market Transaction Survey (“CMTS”) has been conducted annually since 1991 to studythe trading composition of the Exchange Participants (“EPs”) of the Stock Exchange of Hong KongLimited (“SEHK”). The main objective is to understand the relative contribution of trading value inthe HKEX securities market, including the Main Board and the Growth Enterprise Market (“GEM”),by investor type. The market share of online trading is also assessed.
The 2016 survey covered EPs’ transactions on both the Main Board and GEM from January toDecember 2016 (referred to as 2016 study period)1. The survey included Southbound tradingthrough the specialised EPs designated for Shanghai-Hong Kong Stock Connect (launched in 2014)and Shenzhen-Hong Kong Stock Connect launched on 5 December 2016 (collectively referred toas the “Stock Connect” scheme) in the data analysis as trading originated from investors inMainland China. The designated EPs for the Stock Connect scheme are referred to as the“Southbound EPs”.
Trading value by investor type
(1) In 2016, local (Hong Kong) investors’ contribution to total market turnover decreased to 36%(from 39% in 2014/15).
(2) In 2016, overseas investors’ contribution to the total market turnover was 40%, close to the 39% in 2014/15.
(3) Overseas investor trading came mainly from institutions - 33% of the total market turnover(31% in 2014/15) compared to 7% from overseas retail investors (8% in 2014/15).
(4) Local institutional investors contributed 20% of the total market turnover (19% in 2014/15)compared to 16% from local retail investors (19% in 2014/15).
(5) Institutional investors (local and overseas) contributed 53% to total market turnover in 2016(51% in 2014/15). Retail investors’ contribution (local and overseas) decreased to 23% from 27% in 2014/15.
(6) The majority of investor trading activities from the US, UK, Continental Europe and Australia(at least 88% or more) and Singapore (at least 79% or more) were contributed by institutional investors. In contrast, a significant proportion of trading from Mainland China came from retail investors (at least 62%).
(7) In terms of implied value of trading2, overseas retail investor trading declined by 46% in 2016 compared to 2014/15, mainly due to the decrease in investor trading from Mainland China (largely contributed by retail investors).
(8) The contribution of EP principal trading in 2016 further increased to a new record high of 24%(22% in 2014/15). In terms of implied value of trading, EP principal trading declined by 33% in 2016 compared to 2014/15. Over the past ten years3, EP principal trading grew at a compound annual growth rate (“CAGR”) of 22%, which was the highest among all types of trading.
Overseas investor trading by origin
(9) In 2016, UK investors continued as the largest contributor group, with a contribution of 23% of overseas investor trading and 9% of total market turnover (27% and 10% respectively in 2014/15). Mainland China investors took over US to become second capturing 22% of overseas investor trading and 9% of total market turnover, and these were about the same as in 2014/15. US investors slipped from second to third place capturing 20% of overseas investor trading and 8% of total market turnover (22% and 9% respectively in 2014/15).
(10) In 2016, the contribution from Continental European investors increased to 13% of overseas investor trading (8% in 2014/15) and 5% of total market turnover (3% in 2014/15).
(11) Asian investors in aggregate contributed 36% of total overseas investor trading in 2016,similar to the level in 2014/15 and were about the same as the contribution made by the European investors in the year. Following Mainland China investors, Singaporean investors were the second largest contributor group in Asia ― 8% of overseas investor trading and 3% of total market turnover.
(12) The total implied value of overseas investor trading declined by 37% in 2016 compared to 2014/15. Trading from Mainland China investors declined by 38%, UK investors declined by 45% and US investors declined by 43%, compared to the overall market decline of 38% in 2016. In contrast, the implied trading value from Continental European investors had a moderate growth of 10% in 2016.
(13) Over the past ten years, the overall investor trading value from Asia had a positive CAGR of 5%, in contrast to the negative CAGRs of those from the US, UK and Continental European investors, as well as the overall market turnover.
Retail online trading
(14) In 2016, retail online trading accounted for 47% of total retail investor trading compared to 44% in 2014/15, and 11% of total market turnover (slightly down from 12% in 2014/15). In 2016, the implied value of online trading declined by 43% compared to 2014/15.
