The growing ranks of Hong Kong's day traders

Leung Siu-hong's day job is selling Hong Kong real estate. In August, he picked up another activity: trading stocks, joining the growing ranks of Hong Kong's so-called day traders.

The 48-year-old property agent isn't a newcomer to the stock market. He had been investing for the long term, but coming up short on returns. So, he changed strategy.

In August, Leung sold a residential property and pocketed HK$1.2 million. He earmarked 5 per cent of the proceeds, HK$60,000, to invest in the stock market and 20 per cent to buy gold. He's keeping the rest in cash.

Now, he has decided that once the paper gain on any stock play exceeds 3 per cent, he will cash out. "If you make the right call that day, the return is far better than I was making on stocks I had held for more than six months," says Leung.

With markets gyrating, "it is too dangerous" to hold stocks overnight, adds Tang Wenqun, a 40-year-old self-described medium-term investor turned day trader. Tang has been trading stocks for 15 years and used to invest in heavyweight counters such as PetroChina and China Construction Bank, and hold the stocks for at least six months. Her strategy changed after she started to rack up losses.

She invested HK$300,000 to build an equities portfolio in the third quarter of 2007, when the Hang Seng Index was hovering around a historic high of 30,000. After the market turned sour (it hit a low of 11,015 in 2008) Tang began to liquidate. She sold most of her holdings in the first half of 2009, missing out on a market run-up in the second half of the year. She sold the rest in early 2010. By April 2010 she was out of the market completely, having lost half her initial investment.