Overseas investors active in HK derivatives market

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Last updated at: (Beijing Time) Wednesday, December 17, 2003

Overseas investors active in HK derivatives market

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The percentage contribution by overseas investors to Hong Kong Exchanges and Clearing Limited's (HKEx) derivatives market turnover has increased for the second year, according to a press release from the HKEx Tuesday.

Exchange participants' principal trading and trading by local retail investors remained the other two major pillars of the derivatives market, a recent HKEx survey indicated.

The Derivatives Market Transaction Survey 2002/03 revealed that the contribution of overseas investors (mainly institutions) to total contract volume increased to 25 percent in 2002/03 from 20 percent in 2001/02.

Overseas investors' share of trading in each product under study except mini-HSI futures also rose. The largest overseas source was the United States (26 percent of overseas investors' trading), followed by Britain. The aggregate contribution from Asian investors was 29 percent of the overseas investors' trading,mainly from Singapore.

Exchange participants' principal trading contributed 37 percent of total trading and local retail investors 29 percent. The levels were similar to 2001/02.

Pure trading and hedging remained the major purposes of derivatives transactions, accounting for 48 percent and 42 percentrespectively of the total contract volume. The proportion of stockoptions trading for arbitrage was down from 15 percent in 2001/02 to 7 percent in 2002/03.

The survey found that online trading in derivatives grew significantly in the past year. Sixteen percent of total retail turnover (or 5 percent of total market turnover) in 2002/03 was online trading, an increase from 5 percent (or 2 percent of total market turnover of total market turnover )in 2001/02.

The annual Derivatives Market Transaction Survey has been conducted since 1994. This year's survey covered HSI futures and options, mini-HSI futures and stock options.

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