Stockbrokers and funds flock to set up shop in Hong Kong, fuelling boom in financial services

A record number of stockbroking firms, fund managers, private equity investors and other financial firms registered in Hong Kong last year, underscoring the boom in the city’s biggest economic contributor as a pipeline of companies are poised to launch their blockbuster initial public offerings.

Financial firms licensed by the Securities and Futures Commission (SFC) rose 3.5 per cent to 2,702 at the end of March, compared with the same time last year, according to data by the watchdog agency. Licensed stockbrokers increased 10 per cent to 563, still some ways from the 1980s record of 900, but a substantial growth from 400 several years ago. One in 10 of the city’s stockbroking firms are owned by mainland Chinese, surpassing the US as the biggest non-Hong Kong owner of broking licenses, the data showed.

The growth is particular good news for an economy where financial service contributes to the second-biggest portion of output, and employs the second-biggest part of the city’s workforce.

“The active stock market has attracted many mainland firms to enter the Hong Kong stock market, where they hire a lot of people,” said the Hong Kong Securities Association’s chairman Gary Cheung. “This has boosted the brokerage and securities industry as a whole.”

Brokers have been drawn to Asia’s third-largest financial market by the HK$130.3 billion (US$16.6 billion) of shares that changed hands everyday on average in the first five months of this year, a 73 per cent increase from the same period last year.