Online share trading in Hong Kong could represent 33 percent of the local retail trading market by the end of 2003.
A recent study by Dataquest, a research unit of GartnerGroup Inc., predicts that by that time there will be some 330,000 individual investors online, up from 18,000 today.
Dataquest attributes the surge to increasing competition, as new online brokerages bringing with them steep discounts on brokering fees.
"It's currently way out of line," said Lane Leskela, the analyst at GartnerGroup Asia-Pacific, who authored the study. "Stimulating the market, first and foremost, is price." Brokering fees are currently set at 0.25 percent per transaction, or a minimum of HK$50 per trade.
The ability to place trades at any time of day, based on accessible information on financial status and company reports, is also expected to ultimately win customers over to the Internet securities trading channel.
Leskela also predicts trading activity this year will be up thanks to the inclusion of online mutual funds. "[These will bring] in more conservative, family investors. This will be the year of price and competition," he noted.
Dataquest also sees a surge in online trading for the region as a whole.
By 2003, securities traded online by retail investors in all Asia-Pacific markets will account for at least 20 percent of total retail transaction volume on equity markets, GartnerGroup predicts. Such trades currently stand at less than 1 percent.
Dataquest predicts that in two years, 70 percent of Asia-Pacific-headquartered retail brokerages will offer real-time Asian bourse trading facilities via secure Web sites.
Established foreign online brokerages are clearly positioning themselves for the burgeoning market. E*Trade, for example, has launched full-service sites in Japan and in South Korea, with Hong Kong and Southeast Asia coming online early this year.
Charles Schwab has also brought its services to Japan. The firm also now offers Hong Kong customers access to U.S. markets.