Broker exodus: high rents and electronic trading have seen more than half of Hong Kong’s brokerages leave Central since 1997

About half of brokerage firms have chosen locations in Wan Chai, Causeway Bay and farther-flung districts over the last 25 years

The advent of electronic settlement led to the demolition of a vast physical trading hall, although a Central address still has cachet

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The trading hall of the Stock Exchange of Hong Kong in Central, pictured in January 2013. The hall closed in 2017, made obsolete by electronic trading. Photo: SCMP

Published: 8:30am, 22 Jun 2022

High rents and the development of electronic trading have driven many brokerage firms out of Central and into other areas of the city in a major shift from the days before the handover, when a Central address was essential.

About 50 per cent of the city’s 600 brokerage firms have their offices or branches in Wan Chai, Causeway Bay, Tsim Sha Tsui and other parts of Kowloon and the New Territories, according to an estimate by Christopher Cheung Wah-fung, founder and chief executive of Christfund Securities.

Everbright Securities International moved to Causeway Bay over a decade ago, while KGI Capital Asia has offices in Wan Chai, Mong Kok and Tsuen Wan. Even the securities regulator, the Securities and Futures Commission, moved out of Central to Quarry Bay in 2020 to enjoy lower rent.

“Even those who can still stay in Central have generally scaled down their operations to cut down their rent,” said Cheung, a former lawmaker who represented the financial-services industry between 2012 and 2021.

Traders working in the trading hall of Stock Exchange of Hong Kong in Central in August 2011. Brokerages once needed locations in close proximity to the exchange to facilitate paper-based trading and settlement. Photo: SCMP

Grade A office space in Central commanded a premium over other areas in 1997, of course, but the gap is wider today. In fact, the price differential between Central and the nearby Hong Kong Island districts of Wan Chai and Causeway Bay expanded from 25 per cent in 1997 to 41 per cent in May 2022, according to Paul Yien, executive director of office leasing advisory at JLL in Hong Kong. The rental gap between Central and Tsim Sha Tsui, just across the harbour in Kowloon, also rose, from 39 per cent in 1997 to 53 per cent now.