HK brokerages urged to merge to enhance competitiveness
Christopher Cheung says small brokerages should unite to help survive tough conditions
Hong Kong's many small brokerage houses should consider merging to enhance their competitiveness, the newly elected lawmaker for the sector says.
Christopher Cheung Wah-fung won the Legislative Council seat representing stockbrokers, futures traders and gold dealers.
In his first interview after last week's election, Cheung told the he would keep his campaign promise to lobby the government to introduce measures to help brokers survive the tough market.
"However, the brokers themselves should also consider ways to enhance their competitiveness, such as merging with one another," he said.
"When 10 brokers merge, they need to rent only one office instead of 10. They can also share support staff."
Cheung said many brokers prefer to operate as a small entity, as each wants to be the boss.
"Brokers should consider the benefit of being shareholders of a bigger firm instead of being boss of a small entity with only a handful of staff," he said.
"Some brokers have only a few staff, which makes it hard for them to make enough money to expand or upgrade their technology. They should consider following the banks, which combined their resources to upgrade their technology platforms to compete more effectively."
Cheung has been a broker for 41 years and owns Christfund Securities. When he was elected, he said he would let his younger brother handle the business so he can focus on Legco affairs.
Chim Pui-chung, who occupied the financial services seat for 20 years, did not seek re-election. He was nicknamed the "Angry Man from Chiuchow" for his outspoken style. Cheung said he would not be as "aggressive".
"However, if there are issues that are related to the benefit of brokers or Hong Kong people, I will also try my best to argue and fight for them," he said.
Cheung, who has no background in politics, said he would vote independently.
He said he would urge the Hong Kong government to lobby the central government for local brokers to have wider access to the mainland.
For instance, they could be allowed to set up offices in the Qianhai special economic zone to serve clients in Guangdong province.
Cheung would also like the government to allow brokers to reinstate a 0.25 per cent minimum brokerage commission for trades below HK$200,000 to stop the cutthroat competition in the industry.
In April 2003, the city removed the minimum fee for all trades, to lower costs for investors.
"Some brokers charge as little as a few dollars per trade," Cheung said. "This is going to force small players out of business."
