Securities Times reporter Tan Chudan
Under the impact of a new round of epidemic, the survival of Hong Kong's securities industry has attracted the attention of all parties in the market.
The Securities Times reporter learned from the investigation that some brokerage outlets have suspended services, employees working from home has become the norm, and some brokerages have adopted the mode of job rotation and minimum-scale on-site office work.
A few days ago, Li Weihong, chairman of the Hong Kong Securities Industry Association, said that the industry has not yet seen layoffs due to a new wave of epidemics.
However, he believes that the difficult operating environment in the industry, especially the continuous increase in transaction costs, has affected the transaction volume.
In an interview with a Securities Times reporter, a person from a local small and medium brokerage said that there has not been a wave of brokerage closings, but due to the impact of the epidemic on local economic activities and the downturn in the Hong Kong stock market, small and medium brokerages are trying to find ways to survive.
Hong Kong Chinese securities companies
Multiple measures to fight the epidemic
Hong Kong Financial Secretary Chen Maobo said recently that fighting the epidemic is the overriding priority at present, and plans to allocate about 47.5 billion Hong Kong dollars to fight the epidemic.
The Securities Times reporter noticed that Chinese-funded securities firm Haitong International has arranged for Hong Kong employees to work from home.
Everbright Securities International has a customer settlement service counter in Causeway Bay, Hong Kong, which has been suspended since mid-January, and its private wealth management centers in Mong Kok and Sheung Wan have also been closed from February 17 until further notice.
A foreign brokerage investment banker said that the epidemic in Hong Kong has made work more challenging than ever. "We are now working from home, and communication with customers and supervision is mainly online."
On February 15, Li Weihong said that the epidemic has been more than two years since the epidemic, and measures such as working from home have been effective in the industry.
It is believed that the further deterioration of the epidemic will not affect the operation of the financial market.
He stressed that the worst must be prepared for at any time, and the industry is fully prepared to deal with any emergencies.
In an interview with a Securities Times reporter, a number of Chinese brokerages said that at this stage, they are fully fighting the epidemic and at the same time ensuring the efficient operation of various operations.
A relevant person from Guotai Junan International said that it has launched "off-site autonomous services" that support multiple channels.
As most financial services can be completed online through electronic trading systems, the COVID-19 outbreak has not had a direct and significant impact on the company's operations.
It is understood that since January, Guotai Junan International has successively issued a series of important notices such as "On Strengthening the Prevention and Control of the Fifth Wave of the New Crown Epidemic".
First, flexible commuting hours were implemented. Later, as the epidemic situation continued to change, job rotation and minimum-scale on-site office models were used, and accurate management was carried out in accordance with positions and actual business conditions.
The company's information technology (IT) department provides all effective financial technology and information technology resources to ensure remote working support.
Recently, Guotai Junan International delivered the first batch of self-testing boxes to employees, calling on employees to do a good job in self-testing.
A relevant person from Huatai International told reporters that the company immediately established an epidemic prevention working group, successively issued a number of prevention and control systems such as the "Epidemic Prevention and Control Emergency Plan" and "Employee Epidemic Prevention Manual", and established an "information contact and reporting mechanism" and "employee management mechanism". "Safety prevention and control mechanism", "emergency response mechanism" and many other mechanisms.
The company has changed from the initial on-duty rotation system to a working method that combines non-essential non-return to work and telecommuting.
In addition, accurate statistics and reporting of information such as the location of all employees and community safety are carried out every day.
A relevant person from Haitong International said that the company formulated contingency mechanisms and epidemic prevention measures in a timely manner to ensure the health of employees and customers while maintaining the efficient operation of the entire company.
During the epidemic, try to arrange for employees to work remotely from home.
In addition to the 2-day vaccine vacation for each vaccination and transportation subsidies for vaccination, the company also plans to distribute free rapid antigen test kits to employees and their families to provide an extra layer of epidemic prevention protection.
Local small and medium brokerages
Increased business pressure
For small and medium-sized securities companies in Hong Kong, life is not very good at present.
On the one hand, the negative impact of the epidemic on the local economy, the performance of Hong Kong stocks is sluggish; on the other hand, the "price war" in the industry is endless.
An analyst of a local small and medium-sized securities firm in Hong Kong said in an interview with a Securities Times reporter, "The overall economy of Hong Kong is not very good now. Those who do business do not make much money, and those who work part-time are afraid of encountering economic risks. Everyone may not have spare money and are willing to invest. Currently, Hong Kong stocks are trading. The volume is not high, the market is not ideal, and the Hong Kong securities industry is suffering."
He also said that at present, some peers compete with "low commission" or even "zero commission" to compete for customers, and local brokers can only develop other channels to earn income, such as IPO or placement business.
"Everyone is trying to find a way to survive," he said.
The classification of licensed securities firms in Hong Kong can be divided into three groups: A, B, and C, corresponding to brokers ranked 1-14, 15-65 and after 65, roughly corresponding to large, medium, and small brokers.
According to data from the Hong Kong Stock Exchange, as of the end of January 2022, there were 635 securities firms operating in Hong Kong, and there were 65 portfolios A and B. Based on this calculation, there were 570 securities firms in Group C.
The data for 2021 shows that Group C brokerages' share of the total market turnover continued to decline, from 7.67% in January to 5.95% in December, and the share of small and medium-sized brokerages continued to shrink.
Securities Times reporters calculated based on data from the Hong Kong Stock Exchange that in 2021, the total turnover of small brokerages belonging to Group C will be about HK$2.55 trillion.
It is conservatively assumed that the commission rate of each brokerage is 0.25%, that is, the average securities trading commission income of each Group C brokerage in 2021 is only HK$11.18 million.
Li Weihong also said that the industry needs more opportunities to develop new businesses to increase revenue sources, otherwise it will be difficult to improve the treatment of employees in the industry.
He believes that if the brokerage has previously transformed into wealth or asset management, it is expected to maintain the business.
If you insist on engaging in traditional securities business, you will face greater challenges.
Hong Kong raised the stock stamp duty rate in August last year. Li Weihong suggested, "The current trading situation of Hong Kong stocks poses a great challenge to Group C securities companies. We urge the Hong Kong government to review the stock stamp duty rate as soon as possible, and allow Hong Kong securities companies to participate in cross-border Wealth Management Connect."
Online service capabilities are improving
Since the outbreak of the epidemic, the online service model of Hong Kong securities companies has ushered in a test.
During the interview, a Securities Times reporter noticed that Hong Kong's financial industry is accelerating its transformation to "online".
The aforementioned analysts from small and medium-sized brokerage companies mentioned that before the outbreak, people mainly dealt with customers offline, "but now people are afraid to go to the streets. After many financial services are electronic, customers are easy to use, and the securities companies provide customers with The quality of service has not been affected."
A relevant person from Guotai Junan International told reporters that in 2021, the company will set up a financial technology business development department to empower core businesses including wealth management.
In the same year, the company launched a number of products or services to wealth management customers, including the eDDA fast deposit service that can realize transfers in as little as 5 minutes, the "remote account opening" APP that provides convenient account opening functions, and a more intelligent online customer service platform.
The person said that the next step is to increase all-round investment in human resources, capital, and technical resources to elevate digital transformation and financial technology applications to a new level.
Statistics show that in the past four years, more than 80 brokerage firms in Hong Kong have closed down, most of which are local small and medium-sized brokerage firms focusing on traditional brokerage business.
This further highlights the importance of financial technology to the securities industry in resisting external environmental risks, improving business efficiency, and reducing operating costs.
Wang Lei, CEO of Huatai Financial Holdings, said that as a Chinese-funded securities company rooted in Hong Kong, Huatai International is willing to be a "catfish" in the market, and also hopes to empower more small and medium-sized securities companies to share and share financial technology and achieve high-quality development together.