Brokers target share of funds from mainland
Local brokerages are increasing efforts to capture the inflow of mainland investment into Hong Kong-listed stocks, which they expect to be boosted by Beijing's new policy allowing direct share trading across the border.
Many houses now require sales staff to learn Putonghua, and produce research reports or company brochures in simplified Chinese. They are also holding seminars for mainland investors to build up relationships.
While the new policy announced by the State Administration of Foreign Exchange last week permits only Bank of China International to act as a broker for mainlanders directly trading Hong Kong stocks, other firms have been serving people from across the boundary since the relaxation of travel rules in mid-2003 made it easy for individuals to visit Hong Kong.
Since then, many mainland visitors have quietly opened accounts with local brokers and then traded online or by phone. Many firms say about 20 to 40 per cent of their new clients this year are from the mainland. The key difference is that those who trade under the new pilot scheme through BOCI need not come to Hong Kong to open an account, and also do not face the usual US$50,000 cap on exchanging yuan into foreign currencies.
Even so, local brokers believe the new pilot scheme will encourage more mainland investors to focus on the Hong Kong market, causing an increase in account openings.
'I have urged all staff, especially the sales staff, to learn Putonghua or otherwise it would be difficult for them to serve mainland customers,' said Joseph Tong Tang, the executive director of Sun Hung Kai Financial, the city's largest broker.
His firm has a corporate brochure in simplified Chinese and in the past two years has spent HK$50 million upgrading its phone and online-trading capacity.
Similarly, Taifook Securities Group managing director Peter Wong Shiu-hoi said his firm had been preparing to serve mainland clients for a number of years and would expand their services in light of the new policies. 'We have just published a research report on H shares and red chips in simplified Chinese for circulation in the mainland,' he said.
His firm has also held a number of seminars to introduce Hong Kong stock markets to mainland investors. Since local firms are prevented from advertising in the mainland, these types of outreach methods have become essential for brokerages seeking mainland business.
Emperor Capital Group executive director Tom Chan Pak-lam said his firm would hold investor seminars in Guangzhou, Xiamen and Macau next month. 'We would like to have the seminars to raise the Emperor Group brand,' Mr Chan said.
Not all brokerage firms are rushing in. Ping An Securities managing director Michael Sze said his firm would launch an internet trading platform soon to facilitate the trading of Hong Kong shares by mainlanders but otherwise had few plans to try to capture their business.
HSBC and Hang Seng Bank, which have expanded their securities business in Hong Kong, also have no plans to target mainland investors. Analysts say local banks are being conservative because foreign lenders in the mainland are not yet permitted to conduct securities business.