Hong Kong’s stockbrokers face a bleak second half as job cuts loom amid shrinking trading volume and dwindling fundraising plans
- The average daily turnover of the stock market shrank 23 per cent in July from last year to HK$68.7 billion (US$8.76 billion), while IPO also fell this year
- The total commission income for the industry was down by about HK$40 million in June and July compared with a year earlier, brokers estimate
Hong Kong’s stockbroking industry is making an early entry into a bleak winter, as daily transactions and fundraising shrank amid the combination of a year-long US-China trade war with unprecedented civil unrest.
The industry, comprising 27,327 licensed traders in 594 firms, is likely to shrink by at least 10 per cent, beginning with back-office support staff, research and administrative clerks, according to the head of the industry guild.
“Facing shrinking income, brokerage firms have no choice but to cut some people, and I know some firms have laid off almost 10 per cent of their staff already,” said Tom Chan Pak-lam, chairman of the Institute of Securities Dealers. “This is just the beginning. If the protests continue in the rest of this year, more lay-off will come.”
Hong Kong’s economy had been reeling from almost daily protest rallies, since a mob ransacked the city’s legislature on July 1. What began as a peaceful civic protest against a controversial extradition bill on June 9 had descended into mayhem, with police firing tear gas almost every day to drive off mobs that are laying siege to police stations, public space and commercial streets.
The financial markets had not been spared the turmoil. Funds raised by initial public offerings (IPOs) in the first seven months dropped 30 per cent to HK$83.95 billion this year, with three companies shelving US$11 billion in combined fundraising since June.