The financial crisis has hit most parts of the financial sector pretty hard, but not all. The smaller brokers around town are doing quite well. Hong Kong's 365 smallest brokerages increased their market share to 12.97 per cent last month from a record low of 8.24 per cent in August last year, according to Hong Kong Exchanges and Clearing.
The 14 largest brokerages, meanwhile, saw their share drop to 50.71 per cent from 58.28 per cent in September last year. The 51 medium-sized players maintained a share of 36.32 per cent.
The smallest brokerages increased their turnover 82 per cent over the period, while overall average daily turnover rose only 15 per cent from a year earlier. The medium-sized brokerages had a 14.61 per cent year-on-year increase, while the top 14 brokers' turnover grew only 6.62 per cent.
So why are the small boys doing so well? One reason may be that retail investors, who are usually served by the small brokers, are particularly active during a rising market. In addition, the larger brokerages and investment banks have laid off staff, and some of them have joined their smaller rivals.
Many small brokers complained they would be forced out of business when the government forced them to abolish the 0.25 per cent minimum commission in April 2003. Six years later, the figures tell a different story.
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