King Fook Securities becomes latest HK broker to close as volumes slump

The closure of local brokerage King Fook Securities highlights the tough operating conditions facing the city's hundreds of small brokers.

The firm, owned by listed King Fook Holdings, will cease doing business at the end of this month, after sluggish transaction volumes and surging costs prompted the parent firm to exit the business. The 42-year-old firm has been losing money since 2009.

"The firm could have survived under more favourable conditions but a surge in fixed rental and labour expenses forced us into an exit plan," said a King Fook spokeswoman.

King Fook's stock surged 18 per cent yesterday after the announcement of the closure to finish at 67 HK cents.

The brokerage lost HK$34.8 million in the three-year period from 2010 to 2012, eating into the profit of its parent's profitable jewellery business.

King Fook Securities becomes the 12th Hong Kong brokerage to shut its doors this year. Equity transaction volume on the local exchange has slumped as the Hang Seng Index trades below its five-year average.