Retail Securities in China: We've Only Just Begun

by Hua Zhang, May 13, 2010
Industry Trends
Asia-Pacific

Abstract

Retail investors are a major source of income in China’s brokerage market, accounting for 40% of total equities trading value and 80% of trading volume in 2009. Regulatory changes are enabling new business areas, such as margin trading and online brokerage, which will drive further growth.

In a new report, Retail Securities in China: We’ve Only Just Begun, Celent examines the characteristics of retail investors and retail brokerage business trends. The report highlights the potential effects of new products, traditional and online channels, and regulatory changes on future growth.

A number of factors are helping to drive growth in the Chinese retail securities market. The number of investors is rapidly increasing, the quality of listed companies is improving, and deregulation is allowing firms to offer new products and services. Limits on the number of branches will be loosened, which will lead to a significant deepening of brokerages’ physical branch networks. At the same time, a regulatory framework for online brokerages has been established, paving the way for an online brokerage boom.

“Over the next year or two, the CSRC will approve a range of new products and services, including stock index futures, direct equity investment, and margin trading,” says Hua Zhang, analyst with Celent’s Asian Financial Services Group and author of the report. “Stock index futures and margin trading alone will bring revenues of US$8.5 billion.”

“Retail investors are likely to be a major segment for these newly deregulated products,” he adds.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Chinese Brokerage Industry Overview

5

Retail Investors

7

 

Personal Financial Assets

7

 

Age, Gender, and Education of Investors

8

 

Shareholding Value of Retail Investors

10

Brokerage Business Trends in China

11

 

Trading Volume Trends

11

 

Commission Rates

11

 

Sales Force

13

 

Branch Networks

14

 

Other Trends

17

Emergence of New Products

19

 

Stock Index Futures

20

 

Margin Trading

21

Online Brokerage

23

 

Online Brokerage Volume

23

 

Characteristics of Customers

25

 

Online Brokerage Industry

26

 

Regulatory Framework for Online Brokerage

27

Conclusion

29

Leveraging Celent’s Expertise

31

 

Support for Financial Institutions

31

 

Support for Vendors

31

Related Celent Research

32

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