Hong Kong’s stock slump triggers wave of brokerage closures
- Thirty local brokerages have closed down this year, after a record 49 shut shop in 2022, according to Hong Kong stock exchange data
- The closures kick in as the Hong Kong stock market braces for a fourth year of declines and registers the worst year for IPOs since 2001
A historic slump in Hong Kong’s US$4.6 trillion stock market is rippling through the city’s financial industry.
Thirty local brokerages have closed down this year, after a record 49 shut shop in 2022, according to Hong Kong stock exchange data. That comes as Wall Street banks lay off deal makers due to a plunge in initial public offerings.
The Hang Seng Index is heading for a fourth year of declines, the longest losing streak in the gauge’s history, and fell to a one-year low this week. Average daily turnover is down 14 per cent compared with the five-year average and the initial public offering (IPO) market is having its worst year since 2001.
The prolonged slump and the job losses are adding to questions about the future of the city’s position as Asia’s top international finance centre in the wake of Hong Kong’s extreme pandemic curbs and Beijing’s imposition of national security legislation.
“This wave of shutdowns and lay-offs at brokerages is the worst I’ve ever seen,” said Edmond Hui, chief executive officer of Hong Kong-based brokerage Bright Smart Securities. “The key lies in improving the liquidity of the market. Now everyone is struggling. I simply do not see any light at the end of the tunnel.”