Hong Kong’s Securities and Futures Commission (SFC) reported a loss for the second quarter, as shrinking stock market turnover dampened levy income for the market watchdog. The SFC lost HK$52.69 million (US$6.63 million) for the three months to the end of June, its first quarter for the new financial year, compared with a gain of HK$7.34 million during the same quarter a year earlier. The loss was mainly due to a 12 per cent year-on-year decline in levy income collected from investors on stock transactions. The SFC reported a HK$94.54 million loss for the financial year ended March 31, compared with a gain of HK$242.86 million a year earlier. Turnover on the Hong Kong stock market has been negatively affected by the one-year-long trade war between Washington and Beijing, and the unresolved protests which erupted in June. Hong Kong’s stockbrokers face a bleak second half as job cuts loom amid shrinking trading volume and dwindling fundraising plans “The many protests in Hong Kong since early June has turned more violent and some big players such as HSBC and Deutsche Bank have laid off people while smaller brokers are also cutting down staff,” said Gary Cheung Kwok-wai, chairman of Hong Kong Securities Association. “The situation will only get worse in the rest of this year if the protests and the trade war continue.” He added that mainland China’s tightening of capital controls to prevent capital outflow, along with volatile stock market performance, has negatively impacted liquidity in the stock and futures markets this year. The average daily turnover of the stock market totalled HK$94.67 billion for the quarter, reflecting a 12 per cent drop on year. Does the SFC really need 841 staff, each earning an average HK$1.3m annual salary? The downturn was also reflected in lacklustre license applications from those aspiring to join the financial industry. During the quarter, 1,756 licence applications were received for positions related to stock or futures traders, financial advisers, fund managers, down 10.5 per cent from the previous quarter and 13.5 per cent lower than a year earlier. “The stock market has been on a roller-coaster ride this year. This has discouraged investors from opening new financial firms in Hong Kong,” said Cheung. Sixty-six companies applied for securities trading and financial advisory licences, reflecting a drop of 14.3 per cent from the prior quarter and 12 per cent lower than a year earlier. Hong Kong’s insurance sales to mainland Chinese policy holders plunge as daily images of mayhem and protest rallies deter arrivals The cooling comes as the financial services industry has grown to record 44,107 licensed traders, fund managers and financial advisers as the end of June, up 4.5 per cent than a year earlier. The total number of licensed financial firms stood at 3,017 as at the end of June, up 8.7 per cent from a year earlier.