Opinion | Mergers the only way out for small brokers to stay in game
Report shows minor players find it difficult to turn a profit even when the times are good
The 400-odd smallest brokers in the city need to look at mergers with other players to survive as a new report shows they are finding it difficult to turn a profit even when the times are good.
The latest report by the Securities and Futures Commission shows the total net profit of the 500-odd brokers in the city stood at HK$5.66 billion in the first half of this year, up 129 per cent from the second half of last year. The earnings spurt was mainly caused by a 36 per cent rise in market turnover.
But the smallest group of about 400 brokers - in the so-called category C - actually saw profits drop 30 per cent to a combined HK$522 million.
The 14 largest players, which constitute category A, on the other hand, saw profits jump 72 per cent to HK$2.39 billion.
But the biggest winners were the middle group of category B, the 51 mid-sized brokers, whose combined profits soared 738 per cent to HK$2.7 billion.
This establishes a clear pattern of failure by the small players to generate more business even in a good market.