White Collar | Consolidation the way forward for Hong Kong's brokerage sector
Mergers will help the sector fight competition from retail banks and enhance efficiency
Brokers are complaining that government policy has caused them to lose out to fund houses, which have done well in recent years.
It is true that the government has made policy changes to help fund houses grow. Financial Secretary John Tsang Chun-wah announced plans last year to change the law to allow them to set up as companies rather than trusts.
The government also helped the Securities and Futures Commission lobby Beijing to introduce the mutual recognition scheme to allow Hong Kong funds to be sold on the mainland and vice versa.
The friendly policy environment may well be a factor in the 3 per cent growth in the number of fund houses in the city to 978 at the end of May from the end of last year, according to figures released by the commission last week.
Traditional brokers can still survive because they have many die-hard customers
In contrast, the number of licensed securities brokerages, which used to dominate the investment sector, grew only 1.25 per cent to 969 at the end of May.