Research & Corporate Development RETAIL INVESTOR SURVEY 2011

Transcription

1 Research & Corporate Development RETAIL INVESTOR SURVEY 2011 April 2012

2 CONTENTS Page 1. Executive Summary Introduction Retail participation Types of investor Types of stock investor and derivatives investor Investor profile Profile of stock Profile of equity, warrant, CBBC and ETF, Profile of derivatives Stockholding and Trading pattern Stockholding value of stock Listed company shareholdings of stock Trading pattern of stock Relationship between stockholding value and trading pattern of stock Trading pattern of derivatives Trading channels Stock trading channels Derivatives trading channels Online traders Incidence and proportion of online stock traders and online derivatives traders Profile, trading channels and trading pattern of online stock traders and online derivatives traders Perceptions of the HKEx markets Glossary Appendix 1. Survey methodology Appendix 2. Responded sample by investor type Appendix 3. Precision of survey findings HKEX RETAIL INVESTOR SURVEY 2011

3 1. EXECUTIVE SUMMARY The Retail Investor Survey has been conducted periodically since The survey findings provide information on trends and characteristics of retail participation in the HKEx markets. The previous survey was conducted in The latest survey, Retail Investor Survey 2011, was conducted from 14 November to 23 December The terms Dec 2011 or 2011 are used in contexts, tables and charts for ease of reference. Retail participation The 2011 survey found that 35.8% of the Hong Kong adult population (or 2,154,000 individuals) were retail in stocks (ie securities market products) and/or derivatives (ie futures and options) traded on HKEx, compared to 35. in Retail in the HKEx securities market reached a record high in number terms in ,147,000 individuals were stock, or 35.7% of the adult population, compared to 35. in Stockowners reached their highest level, both in number (2,035,000) and in percentage (33.8%) of the adult population. Retail participation in the HKEx derivatives market remained low 2. of the adult population were derivatives (122,000 individuals), compared to 1.3% in The large majority of them (94%) invested also in stocks. In respect of product investment, almost all stock (99%) invested in equities and a significant proportion (2) in Exchange Traded Funds (ETFs). Fewer of them invested in warrants (7.) or Callable Bull/Bear Contracts (CBBCs) (5.9%), collectively 9.7% in warrants and/or CBBCs, and in derivatives (5.3%). As a proportion of the Hong Kong adult population, 7.5% invested in ETFs and 3.5% in warrants/cbbcs. Investor profile The typical Hong Kong retail stock investor was 47 years old, with matriculation or above education, a monthly personal income of about HK$16,250 and a monthly household income of about HK$35,000. Compared with the typical Hong Kong retail stock investor, the typical Hong Kong retail derivatives investor was younger (40 years old), more educated (tertiary or above), and with a higher monthly personal income (HK$22,500) and a higher monthly household income (HK$45,000). More of the derivatives were employed in the finance industry and in professional and business services than stock. The typical warrant/cbbc investor was similarly young (42 years old) as the typical derivatives investor, with a similar monthly personal income (HK$22,500) and even a higher monthly household income (HK$55,000). They comprised a larger proportion of younger individuals, individuals employed in the finance industry, and individuals of higher work status than in equities or ETFs. The typical ETF investor was of a similar age as the typical equity investor (48 vs 47), but was more educated (tertiary or above vs matriculation or above) and with a higher personal income (HK$22,500 vs HK$16,250) and monthly household income (HK$45,000 vs HK$35,000). Stockholding and trading pattern Including those who did not hold any stocks (ie HKEx cash market products) at the time of interview, stock held a median value of HK$130,000 in stockholdings (up 3 from HK$100,000 in 2009, compared to a 2% drop in the total market capitalisation of the HKEx stock market). The majority of their stockholdings were listed company shares and the majority of them (73%) held only listed company shares and not other cash market products. The number of listed company shares in their stock portfolio was not big a median of four and only of them held more than 10. The median value of their listed company shareholding was HK$100,000. HKEX RETAIL INVESTOR SURVEY

4 Comparatively, ETF and CBBC tended to hold a larger stock portfolio (a median of HK$300,000 and HK$200,000 respectively). ETF also tended to have more listed company shares in their portfolio a median of 6 (25% held more than 10) and to have a relatively larger listed company shareholding value (a median of HK$180,000). On the other hand, a comparatively high proportion () of CBBC did not hold any listed company shares at the time of interview but they tended to trade a lot (see below). Among stock, did not trade in the 12 months preceding the interview (but were holding stocks at the time of interview), up from in These non-trading stock were relatively small they tended to have a much lower stockholding value (a median of HK$65,000) and shareholding value (a median of HK$55,000) and a large majority of them (87%) held only listed company shares in their portfolio. Including these non-trading, stock in median terms traded stocks less frequently in 2011 but with a slightly larger deal size than in 2009 the median number of stock transactions was 6 (down from 10 in 2009) and the median average value per stock transaction was HK$40,000 (up from HK$35,000 in 2009). The median implied total stock transaction value per stock trader in the 12-month period in 2011 was HK$400,000 (compared to HK$468,000 in 2009). Broadly speaking, the higher the value of stocks held by a stock investor, the more frequently he/she tended to trade and the larger his/her deal size. Most stock traders traded mainly through banks 77%, up from 74% in 2009; 74% traded solely through banks, up from 7 in Stock traded mainly through broker firms (22%) comprised a larger proportion of males, a larger proportion of individuals employed in finance industry, and individuals with a higher monthly personal income than those trading mainly through banks. They also had a larger proportion ( vs 1) holding a large number of stocks (more than 10) and a larger proportion (5 vs 45%) having a high trading frequency (more than 10 transactions in the year) than those trading mainly through banks. The proportion of stock traders trading online further increased in %, up from 67% in Online stock traders tended to be younger, with higher education level and work status, to trade stocks more frequently and to trade mainly through banks (more so than non-online stock traders). Among stock investing in different products, warrant/cbbc (who invested in warrants and/or CBBCs) tended to trade more frequently in the securities market (a median of 75 transactions) than, though with a similar average deal size to, equity. CBBC, in particular, were the most frequent stock traders (a median of 166 transactions) and warrant came second (a median of 74 transactions). ETF also tended to trade more frequently than equity but they tended to have a larger deal size. The majority of warrant (53%) did not invest in CBBCs while the majority of CBBC (56%) invested also in warrants. CBBC tended to trade more frequently in warrants/cbbcs than warrant (a median of 48 transactions vs 10 transactions) but with a similar deal size. As a group, warrant/cbbc had a median number of warrant/cbbc transactions of 10 and a median average per warrant/cbbc transaction of HK$20,000 (compared to HK$40,000 per stock transaction). They had a higher usage of broker firms (36%) than equity or ETF (22% and respectively) and more use of online trading (86%) than equity or ETF (69% and 76% respectively). Among all stock, only 5% invested also in derivatives. These stock-and-derivatives tended to trade stocks more frequently than those invested only in stocks (ie stock-only ) (50 vs 6 transactions in the year). They tended to have a higher usage of broker firms (46%) than stock-only () and more use of online trading (77%) than stock-only (68%). HKEX RETAIL INVESTOR SURVEY

5 Derivatives trading All derivatives, by nature of derivatives trading, had traded derivatives during the 12-month period in Compared with 2009, they had a higher medium number of derivatives transactions (12 vs 10), a similar average contract volume per derivatives transaction (2 contracts) and a higher median implied total contract volume per investor in the year (40 vs 25). The majority of derivatives traded mainly through broker firms (64%, up from 52% in 2009). 59% of them traded solely through broker firms while 34% traded solely through banks. 67% of them were online derivatives traders, compared to 69% in Perceptions of the HKEx markets Stock had generally positive perceptions of most aspects of the Hong Kong stock market assessed in the survey. They were most positive about trading information available in the Hong Kong stock market. Derivatives were generally positive about the various aspects of the HKEx derivatives markets. They were most positive about effective regulation of derivatives brokers. Retail as a whole were also generally positive above the attribute HKEx gives priority to public interest. Note: Caution is needed in interpreting the findings on certain investor types (mainly derivatives and CBBC ) because of their small sample sizes. HKEX RETAIL INVESTOR SURVEY

6 2. INTRODUCTION The Retail Investor Survey (RIS) has been conducted periodically since As in prior years, the 2011 survey (RIS2011) was conducted by a market research company on behalf of HKEx. The survey fieldwork was carried out from 14 November to 23 December The objectives of RIS2011 are to assess: the incidence of retail participation in the HKEx securities and derivatives markets and the socio-economic profiles of various types of retail and non-; retail portfolio holding (total holding value of securities market products and number and value of listed company shareholdings); retail trading pattern and incidence of online trading; retail trading channels; and retail perception of the various aspects of the HKEx stock and derivatives markets. It should be noted that the findings on certain investor types, mainly derivatives and CBBC, are subject to relatively large error due to the small size of the samples of the respective investor types in the survey. Therefore, caution is needed in interpreting the findings on these types of investor. (See Glossary for definition of the different types of investor.) 1 Before 2000, it was conducted by the Stock Exchange of Hong Kong (SEHK), now a wholly-owned subsidiary of HKEx. HKEX RETAIL INVESTOR SURVEY

7 3. RETAIL PARTICIPATION 3.1 Types of investor 2 In December 2011, 35.8% of the Hong Kong adult population (or 2,154,000 individuals) were retail in stocks (ie securities market products) and/or derivatives (ie futures and options) traded on HKEx. In terms of number, stock reached 2,147,000 individuals in December 2011, the highest level since the survey started in 1989, representing 35.7% of the adult population in 2011, compared to 35. in Among them, 82% (1,760,000 or 29.3% of the adult population) were stock traders. Stockowners reached the highest level in 2011, both in number (2,035,000) and in percentage (33.8%) of the adult population. Retail participation in the HKEx derivatives (ie futures and options) market remained low only 2. of the adult population (or 122,000 individuals) were derivatives. Retail participation in the Mainland China stock markets and other overseas stock markets remained low in 2011 (2%-3%). Retail participation in overseas derivatives markets was also low (less than ). Table 1. Types of investor (2011) Projected number of individuals ( 000) Percentage of Hong Kong adult population Retail 2, % Stock 2, % Stockowners 2, % Stock traders 1, % Derivatives Non- 3, % Total 6, Table 2. Investment in securities products* (2009 and 2011) Percentage of Hong Kong adult population Dec 2009 Dec 2011 Stocks or derivatives traded on HKEx % Stocks traded on Mainland China markets 2.8% 2. Stocks traded on overseas markets other than Mainland China Derivative products traded on overseas markets (including Mainland China) % 0.5% 0.5% * Held at the time of interview or had traded in the 12 months preceding the interview. 2 See Glossary for definitions. HKEX RETAIL INVESTOR SURVEY

8 Projected number of derivatives ('000) Percentage of adult population as derivatives Projected number of stockowners / stock ('000) Percentage of adult population as stockowners / stock Figure 1. Trend of stockowners and stock Trend of stock owners and stock 2, % % 2,400 35% 2, % 32.4% 32.6% 33.8% 3 1,600 1, % % 20.3% 19.8% 22.8% 17.5% % 15.9% 25% % Jan 1999 Nov 2000 Dec 2001 Dec 2002 Dec 2003 Oct 2004 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Projected number of stockowners Percentage of adult population as stockowners Projected number of stock Percentage of adult population as stock Figure 2. Trend of derivatives Trend of derivatives % 6% 5% % 4% % % % % % % % 2% 0 Nov 2000 Dec 2001 Dec 2002 Dec 2003 Oct 2004 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Projected number of derivatives Percentage of adult population as derivatives Note: The figures on derivatives presented in this chart were subject to relatively large error due to the small size of the sample of derivatives in the surveys. 3.2 Types of stock investor and derivatives investor The great majority of stock (94.7%) invested only in stocks 3 (stock-only ) and 5.3% invested also in derivatives (stock-and-derivatives ). 3 Refer to all cash market products on HKEx. HKEX RETAIL INVESTOR SURVEY

9 Almost all stock invested in equities (99.), and 72.4% invested only in equities and not warrants, Callable Bull/Bear Contracts (CBBCs) or Exchange Traded Funds (ETFs). 7. of stock invested in warrants (down from 10.2% in 2009) while 5.9% of stock invested in CBBCs (down from 7. in 2009). Collectively 9.7% of stock invested in warrants and/or CBBCs, down from 12. in Among warrant, 47% invested also in CBBCs (similar to the 5 in 2009). Conversely, 56% of CBBC invested also in warrants, much lower than the 73% in % of stock invested in ETFs in 2011, down from 24.4% in Among ETF, 95.5% also invested in equities; conversely, 20.2% of equity also invested in ETFs. The proportion of stock who did not trade during the 12-month period was 18. in 2011, up from 15. in Among derivatives, the proportion invested only in derivatives but not stocks decreased from 13.5% in 2009 to 5.8% in By stocks/derivatives invested Table 3. Types of stock investor ( ) As percentage of stock (%) Oct 2004 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Stock-only Stock-and-derivatives By cash market product invested Equity Equity-only stock Warrant/CBBC Warrant Warrant-only stock CBBC CBBC-only stock 0.2 ETF ETF-only stock By trading status Stock traders Non-trading stock : Nil : Not available. Table 4. Types of derivatives investor ( ) As percentage of derivatives (%) Oct 2004 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Derivatives-only Stock-and-derivatives Note: Reflecting the nature of derivatives trading, all derivatives had derivatives transactions during the past 12 months at the time of the interview, i.e. all are derivatives traders. HKEX RETAIL INVESTOR SURVEY

10 4. INVESTOR PROFILE 4.1 Profile of stock The typical Hong Kong retail stock investor was 47 years old, with matriculation or above education, a monthly personal income of about HK$16,250 and a monthly household income of about HK$35,000. In comparison to the Hong Kong adult population and non-, stock comprised a larger proportion of males, individuals who received tertiary or above education, individuals employed in the finance industry and individuals of higher work status, higher monthly personal income and monthly household income. 4.2 Profile of equity, warrant, CBBC and ETF 4,5 The typical equity investor was 47 years old, with matriculation or above education, a monthly personal income of about HK$16,250 and a monthly household income of about HK$35,000. The typical warrant investor was 43 years old, with tertiary or above education, a monthly personal income of about HK$22,500 and a monthly household income of about HK$55,000. Compared with equity and ETF, warrant comprised a larger proportion of males (66%), younger individuals, individuals of higher work status and individuals employed in the finance industry. The typical CBBC investor was 40 years old, with tertiary or above education, a monthly personal income of about HK$22,500 and a monthly household income of about HK$55,000. Compared with equity and ETF, CBBC comprised a larger proportion of males (6), younger individuals, individuals employed in the finance industry, and individuals of higher work status. When warrant and CBBC were viewed as a group (given the similar investment style of the products), a typical warrant/cbbc investor was 42 years old, with tertiary or above education, a monthly personal income of about HK$22,500 and a monthly household income of about HK$55,000. Compared with equity and ETF, warrant/cbbc comprised a larger proportion of males (65%), younger individuals, individuals employed in the finance industry, and individuals of higher work status. The typical ETF investor was 48 years old, with tertiary or above education, a monthly personal income of about HK$22,500 and a monthly household income of about HK$45,000. Compared with in equities, warrants and CBBCs, ETF comprised a larger proportion of older people (47% aged 50 or above). 4 5 See survey limitations in Appendix 1. Note that the different categories of stock as identified by the product they invested in were not mutually exclusive from one another. That is, each investor type may at the same time be any of the other three types of investor. All findings on the characteristics of CBBC in this section and the subsequent sections are subject to relatively large error due to the small sample of CBBC. Therefore, caution is needed in interpreting the findings on CBBC. HKEX RETAIL INVESTOR SURVEY

11 4.3 Profile of derivatives 6 The typical Hong Kong retail derivatives investor was 40 years old, with tertiary or above education, a monthly personal income of about HK$22,500 and a monthly household income of about HK$45,000. Compared with the Hong Kong adult population and with stock and non-, derivatives comprised a larger proportion of males (64%), younger individuals (47% aged below 40), individuals employed in the finance industry and in professional and business services, and individuals of higher monthly personal and household income. 6 All findings on the characteristics of derivatives (and their sub-types) in this section and the subsequent sections are subject to relatively large error due to the small sample of derivatives. Therefore, caution is needed in interpreting the findings on derivatives. HKEX RETAIL INVESTOR SURVEY

12 Sex Table 5. Profile of different investor types (2011) Adult population Stock Stock traders Derivatives Non Male 45.8% % 63.9% 42.8% Female 54.2% 48.9% 47.8% % Age % 0.9% % % 19.3% 17.9% % 20.3% % % 22.2% % % 26.3% 27.6% % 60 or over % 15.7% 11.4% 25.2% Median Education level No schooling / kindergarten 4.5% 0.5% 0.3% 6.7% Primary % 4.8% 3.8% 18.7% Lower secondary 14.5% % 5.2% 15.8% Upper secondary 27.6% 25.4% 24.8% 19.4% 28.8% Matriculation % 10.2% 19.3% 7. Tertiary or above 30.9% 46.4% 46.9% 52.4% 22.3% Refusals 0.6% 0.4% 0.5% 0.7% Occupation Managers / administrators / professionals 11.8% % 24.9% 5.6% White collar 22.3% 25.6% 25.3% 19.8% 20.5% Blue collar % 23.3% 21.4% Homemakers 17.5% 15.6% 16.2% % Retirees 17.6% 14.4% % 19.4% Students % 1.3% % Unemployed persons % 2.6% 5.2% 4.9% Refusals 1.5% 1.9% 1.8% 4.8% 1.2% Industry of employed persons* Manufacturing 7.5% 7.6% 7.5% 4.8% 7.4% Construction 9.2% 6.6% 6.3% 2.3% 11.2% Wholesale, retail, import/export trades, restaurants and hotels 24.5% % Transport, storage, courier and communication 12.9% 12.6% 11.7% 14.3% 13. Financing and insurance 9.9% 14.9% 14.9% 23.5% 6. Professional and business services % 7.9% 15.4% 9.4% Social and personal services 19.4% % 4.7% 19. Others 5.8% 6.5% 7.4% 4.6% 5.2% Refusals 1.8% % 4.4% 1.6% Median monthly personal income (HK$)* 11,250 16,250 18,750 22,500 8,500 Median monthly household income (HK$) 22,500 35,000 35,000 45,000 18,750 : Nil * Among those who were engaged in full-time or part-time employment. Note: Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

13 Sex Table 6. Profile of different investor types by selected cash market products (2011) Equity Warrant CBBC Warrant/ CBBC ETF Male 51.2% 65.6% % 48.9% Female 48.8% 34.4% % 51. Age % % 7.8% 9.3% % % % 33.8% % 22.5% 17.3% 20.2% 25.3% % 24.9% 25.9% % 60 or over 16.3% 11.8% 8.8% 10.8% 11.5% Median Education level No schooling / kindergarten 0.5% Primary 5.5% 2.9% 1.6% % Lower secondary % 6.6% % Upper secondary 25.5% 24.6% 27.6% 27.2% 21. Matriculation 9.7% 11.3% 13.6% 10.4% 9.3% Tertiary or above 46.2% 55.6% 50.6% 53.4% 53.5% Refusals 0.4% 0.5% Occupation Managers / administrators / professionals % % 28.3% White collar 25.8% 22.5% 13.2% 20.5% 22.9% Blue collar % 16.2% % Homemakers 15.6% % 13.4% 13.5% Retirees 14.5% % 12.5% 12. Students 1.6% 1. Unemployed persons 2.6% 2.7% 4.8% % Refusals 1.8% 3.3% Industry of employed persons* Manufacturing 7.7% 7.7% 4.7% 5.6% 6. Construction 6.5% 1.9% 9.6% 5.7% 5.9% Wholesale, retail, import/export trades, restaurants and hotels 20.9% 34.3% 28.8% % Transport, storage, courier and communication 12.6% 17.7% 7.3% 14.3% 14.8% Financing and insurance 14.9% % 24.7% 13.8% Professional and business services 8.7% 8.3% 9.9% 8.8% 11. Social and personal services % 4.8% 5.7% 19.3% Others 6.5% % 3.2% Refusals % 1.4% 4.4% Median monthly personal income (HK$)* 16,250 22,500 22,500 22,500 22,500 Median monthly household income (HK$) 35,000 55,000 55,000 55,000 45,000 : Nil * Among those who were engaged in full-time or part-time employment. Note: Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

14 10 Figure 3. Investor profile over the past decade Stock Derivatives Sex Sex - stock 10 Sex Sex - derivatives 8 44% % 47% 47% 49% 8 42% 37% 4 38% 37% 3 32% 36% % % 55% 53% 53% % 63% 59% 62% 63% 69% 68% 64% Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 Male Female Male Female Education Education - stock investor Education Education - derivatives % 2% 3% 8 32% 35% 43% 38% % 46% 8 35% 47% 54% 6 56% 43% 44% 52% % 54% 5 53% 5 52% 48% 47% 4 55% 44% 44% 34% 39% 53% 48% 44% 1 7% 9% 8% 7% 9% 6% Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec % 5% 5% 2% 5% 4% Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 Primary completed or below Secondary to matriculation Tertiary or above Refusals Primary completed or below Secondary to matriculation Tertiary or above Refusals Occupation Occupation - stock 2% 3% 3% 4% 5% 2% 2% 28% 26% 26% 27% 28% 33% 34% 34% 23% 23% 27% 27% 28% 3 26% 22% 26% Occupation Occupation - derivatives 4% 3% 5% % 32% 42% 28% 32% 27% 25% 5% 5% 24% 27% 23% 25% 25% 25% 23% 24% 22% 26% 23% Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 Managers/administrators/professionals White collar Blue collar No employment* Refusals 4 28% 3 32% 36% 4 39% 25% Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 Managers/administrators/professionals White collar Blue collar No employment* Refusals (HK$) 40,000 35,000 Median personal income ** Median monthly personal income** - stock (HK$) 40,000 35,000 Median monthly personal income ** - derivatives personal income** 35,000 30,000 30,000 27,500 27,500 25,000 20,000 15,000 18,750 22,500 18,750 18,750 18,750 22,500 16,250 16,250 25,000 20,000 15,000 22,500 22,500 22,500 22,500 22,500 10,000 10,000 5,000 5,000 0 Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 ** Among those who were engaged in a full-time or part time employment. * Not engaged in full time or part-time employment, including students, homemakers, retirees and unemployed persons. ** Among those who were engaged in full-time or part-time employment. Note: Percentages may not add up to 10 due to rounding. 0 Dec-01 Dec-02 Dec-03 Oct-04 Dec-05 Dec-07 Dec-09 Dec-11 ** Among those who were engaged in a full-time or part time employment. HKEX RETAIL INVESTOR SURVEY

15 5. STOCKHOLDING AND TRADING PATTERN 5.1 Stockholding 7 value of stock The median market value of stockholdings among all stock (including non-stockowners) was HK$130,000 (up from HK$100,000 in 2009) and that among all stockowners was HK$150,000 (the same as in 2009). Compared to stock-only, a larger proportion of stock-and-derivatives did not hold any stocks ( vs 5% for stock-only ). Even so, they as a group had a slightly larger median stockholding value than stock-only (HK$150,000 vs HK$120,000). ETF tended to have a relatively larger stockholding value (a median of HK$300,000) than CBBC (HK$200,000), warrant (HK$150,000) and equity (HK$130,000). Compared with stock traders, non-trading stock (stock who did not trade during the 12-month period) tended to have a much smaller stockholding value a median of HK$65,000 vs HK$150,000. Figure 4. Market value of stockholdings by stock (2011) Market value of stockholdings by stock (2011) % 6% 5% 6% 8% 8% 8% % 8% 7% 5% 5% Stock-only All stock 1 9% 1 1 6% 6% Stock-andderivatives 6% 9% 7% 7% 5% 8% 1 7% 8% 5% 8% Equity 1 1 Warrant 6% CBBC 2% 22% 9% 4% 3% 8% 22% 3% 3% 6% 4% 6% ETF Stock traders 9% Non-trading stock Median* (HK$) All stock Nil HK$20,000 >HK$20,000-HK$50,000 >HK$50,000-HK$100,000 >HK$100,000-HK$200,000 >HK$200,000-HK$500,000 >HK$500,000-HK$1m >HK$1m Refusals Stockowners Stock-only Stock-andderivatives Equity Warrant CBBC ETF Stock traders Non-trading stock , , , , , , , , ,000 65, , , , , , , , , ,000 95,000 Note: Percentages may not add up to 10 due to rounding. 7 Stockholding refers to the holding of all HKEx cash market products at the time of the interview. HKEX RETAIL INVESTOR SURVEY

16 5.2 Listed company shareholdings 8 of stock Number of listed company shareholdings The median number of listed company shareholdings among all stock (including non-shareowners) and that among all shareowners were both 4. 35% of stock held more than 5 listed company stocks and only held more than 10. The pattern of listed company shareholdings of stock-and-derivatives did not differ much from that of stock-only (both had a median number of 4), except that a larger proportion of them did not hold any listed company shares at the time of interview ( vs 6%). ETF tended to have a larger number of listed company shareholdings than equity, warrant and CBBC (a median of 6 for ETF vs 3 to 4 for the others, and 56% of ETF held more than 5 listed company stocks vs 34%-42% for the others). A relatively high proportion () of CBBC did not hold any listed company shares at the time of interview, compared to 1 of warrant and ETF, 6% of equity and 7% of stock as a whole. Stock traders tended to have a larger number of listed company shareholdings than non-trading stock (a median of 4 vs 2, and 38% of stock traders held more than 5 listed company stocks vs 2 for non-trading stock ). Figure 5. Number of listed company shareholdings by stock (2011) Number of listed company shareholdings (2011) 10 2% 8% 25% 8 23% 24% 23% 22% 23% 25% 25% % 28% 1 26% 22% 26% 3 33% 3 25% 33% 7% 6% All stock Shareowners Stock-only 1 Stock-andderivatives 7% 6% Equity 1 Warrant 4% CBBC 4% 1 1 8% ETF Stock traders 28% 3% Non-trading stock ^ Median* All stock Nil >10 Refusals Shareowners Stock-only Stock-andderivatives Equity Warrant CBBC ETF Stock traders Non-trading stock ^ ^ Non-trading stock who did not hold any listed company shares might be holding other products like warrants or ETFs. Note: Percentages may not add up to 10 due to rounding. 8 Listed company shareholding refers to the holding, at the time of the interview, of listed company shares traded on HKEx. HKEX RETAIL INVESTOR SURVEY

17 5.2.2 Market value of listed company shareholdings of stock About 73% of stock, 74% of equity and 78% of shareowners had a stock portfolio 9 comprising listed company shares only and without other cash market products. A much smaller proportion of warrant (28%) and CBBC (26%) had listed company shares only. In median terms, the stock portfolios of stock as a whole in value terms comprised 10 listed company shares while the corresponding figures for warrant and CBBC were both 8. The median market value of listed company shareholdings among all stock (including non-shareowners) was HK$100,000, and that among shareowners was HK$120,000. The findings were the same as in Compared to stock-only, stock-and-derivatives tended to have a larger listed company shareholding value (a median of HK$150,000 vs HK$100,000). A much smaller proportion of them held only listed company shares but not other cash market products in their stock portfolio (4 vs 75% for stock-only ). ETF tended to have a relatively larger shareholding value (a median of HK$180,000) than other investor types (HK$100,000 HK$125,000). Stock who did not trade in the 12 months preceding the interview tended to have a much lower shareholding value (a median of HK$55,000, the same as in 2009). A large proportion (87%) of them held only listed company shares in their stock portfolio. Figure 6. Listed company shareholding as a percentage of market value of stockholding by stock (2011) Listed company shareholding as a percentage of market value of stockholding (2011) 10 6% 6% 3% 4% 6% 8 28% 26% % 78% 75% 28% 74% 42% 44% 63% 7 87% 3% 2% 7% 3% 6% All stock Shareowners Stock-only 9% 4% Stock-andderivatives 3% 6% Equity 6% 8% 1 Warrant 5% 5% CBBC 5% 2% 6% 1 8% 0.5% 3% 3% ETF Stock Non-trading traders stock ^ Median (%) All stock Shareowners Nil > - <1 1-49% 5-99% 10 Refusals Stock-only Stock-andderivatives Equity Warrant CBBC ETF Stock traders Non-trading stock ^ ^ Non-trading stock who did not hold any listed company shares might be holding other products like warrants or ETFs. Note: Percentages may not add up to 10 due to rounding. 9 Stock portfolio refers to the portfolio of stockholding, ie the holding of all HKEx cash market products. HKEX RETAIL INVESTOR SURVEY

18 Figure 7. Market value Market of listed value company of listed company shareholdings (2011) by stock (2011) % 7% 6% 7% 7% 7% 1 1 9% 6% 8% 9% 9% 7% 1 6% All stock Shareowners Stock-only 5% 1 8% Stock-andderivatives 7% 7% 1 9% 6% Equity 1 1 7% 9% 2 6% 7% 1 Warrant 5% 1 1 5% 7% CBBC 1 2 8% 1 7% 6% 7% 1 8% ETF 6% 8% Stock traders 1 4% 3% 7% 3% Non-trading stock ^ Median* (HK$) All stock Nil HK$20,000 >HK$20,000-HK$50,000 >HK$50,000-HK$100,000 >HK$100,000-HK$200,000 >HK$200,000-HK$500,000 >HK$500,000-HK$1m >HK$1m Refusals Shareowners Stock-only Stock-andderivatives Equity Warrant CBBC ETF Stock traders Non-trading stock ^ , , , , , , , , ,000 55, , , , , , , , , ,000 55,000 ^ Non-trading stock who did not hold any listed company shares might be holding other products like warrants or ETFs. Note: Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

19 5.3 Trading pattern of stock Pattern in the HKEx overall stock market Stock tended to trade less frequently in 2011 but with a slightly larger average value per stock transaction than in 2009: o o o The proportion of stock who did not trade at all in the 12-month period was in 2011, up from in The median number of stock transactions (buying and selling were counted as two transactions) for all stock was 6, down from 10 in Excluding non-trading stock, the median number of stock transactions for all stock traders was 10, the same as in The median average value per stock transaction was HK$40,000 in 2011, up from HK$35,000 in o The median implied total stock transaction value 10 per stock trader in 2011 was HK$400,000, compared to HK$468,000 in Compared with stock-only, stock-and-derivatives : o o o Tended to trade stocks much more frequently (a median of 50 transactions in the 12-month period vs 6 transactions for stock-only ); Tended to have a similar average value per stock transaction (a median of HK$40,000); Tended to have a much higher implied total stock transaction value during the 12-month period (HK$3 million vs HK$0.4 million); and o In aggregate contributed an estimated of total retail stock trading, compared to 83% by stock-only. Compared with equity, warrant/cbbc (who invested in warrants or CBBCs or both): o o o o Tended to trade stocks more frequently (a median of 75 transactions in the 12-month period), even more so for CBBC alone (166 transactions) (vs 6 transactions for equity ); Tended to have a similar average value per stock transaction (a median of HK$40,000); Tended to have a much larger implied total stock transaction value during the 12-month period (a median of HK$3.5 million), even more so for CBBC alone (HK$5.2 million) (vs HK$0.4 million for equity ); and In aggregate, they contributed an estimated 42% of total retail stock trading. Compared with equity, ETF : o o o Tended to trade stocks more frequently (a median of 12 transactions in the 12-month period vs 6 transactions for equity ); Tended to have a relatively higher average value per stock transaction (a median of HK$50,000 vs HK$40,000) and a larger implied total stock transaction value during the 12-month period (a median of HK$1 million vs HK$0.4 million); and In aggregate, they contributed an estimated 36% of total retail stock trading. 10 The implied total stock transaction value during the 12-month period for a respondent was deduced from the respondent s average value per transaction and his/her frequency of trading in stocks during the 12-month period. The figure counts both buying and selling transactions and is subject to estimation error. HKEX RETAIL INVESTOR SURVEY

20 Stock traders who traded more frequently tended to have a larger deal size and a larger implied total transaction value in the 12-month period. Among stock traders, 46% were high-frequency stock traders (with more than 10 transactions in the 12-month period) 11 who contributed in aggregate an estimated 92% of all retail stock trading, compared to 96% in Figure 8. Number of stock transactions by stock in the past 12 months ( ) Number of stock transactions by stock in the past 12 months ( ) 3% 8% 22% 22% 28% 26% % % 9% 6% 6% 8% 6% 8% % 7% 8% 1 8% 9% 7% % 7% 3 28% Dec 2001 Dec 2002 Dec 2003 Oct 2004 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Nil More than 10 Refusals Median* Dec 2001 Dec 2002 Dec 2003 Oct 2004 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Stock Stock traders : Not available. Notes: (1) Number of stock transactions refers to transactions in all HKEx cash market products. (2) Percentages may not add up to 10 due to rounding. 11 The classification of stock traders into low-, medium- and high-frequency of trading is judgmental. classification follows that used in past surveys for comparison purpose. The current HKEX RETAIL INVESTOR SURVEY

21 10 Figure 9. Number of stock transactions in the past 12 months by stock investor type (2011) Number of stock transactions in the past 12 months by stock investor type (2011) 8 38% 36% 46% 38% 52% 6 4 7% 8% 1 1 All stock Stock-only 73% 6% 8% 5% 8% Stock-andderivatives 9% Stock traders 8% 1 Equity 9 98% 94% 3% 3% 2% 2% 2% CBBC Warrant Warrant/ CBBC 7% 7% 9% 1 ETF Median* (incl. non-trading ) Median* (excl. non-trading ) Nil More than 10 Refusals All stock Stock-only Stock-andderivatives Stock traders Equity Warrant CBBC Warrant/ CBBC ETF : Not applicable Notes: (1) Number of stock transactions refers to transactions in all HKEx cash market products. (2) Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

22 Figure 10. Average value per stock transaction in the past 12 months of stock traders by type (2009 and 2011) Average value per stock transaction in the past 12 months of stock traders by type 10 3% 3% 2% 4% 2% 3% 3% 9% 9% 9% 9% 8% 1 7% 2% 5% % % 38% 39% 34% 39% 5 39% 48% 39% 32% 29% 29% 28% 29% 2 24% 22% 23% Stock-only Stock-andderivatives Equity Warrant CBBC Warrant/CBBC ETF All stock traders Type of stock trader (2011) HK$20,000 >HK$20,000 - HK$50,000 >HK$50,000 - HK$100,000 >HK$100,000 Refusals All stock traders Type of stock trader (2011) Stock-only Stock-andderivatives Equity Warrant CBBC Warrant/ CBBC ETF Median* (HK$) 35,000 40,000 40,000 40,000 40,000 40,000 36,000 40,000 50,000 Notes: (1) The average value per stock transaction refers to transactions in all HKEx cash market products. (2) Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

23 Figure 11. Implied total stock transaction value in the past 12 months of stock traders Implied total stock transaction by type value (2009 in the and past 2011) 12 months of stock traders by type % 3% 2% 4% 2% 3% 3% 2% 5% 1 42% 44% 46% 55% 26% 1 24% 24% 25% Stock-only 22% 8% 4% 8% Stock-andderivatives 24% Equity 25% 29% 1 32% 9% 9% 4% 2% 3% 1 2% 2% 7% 1 Warrant CBBC Warrant/CBBC ETF All stock traders Type of stock trader (2011) HK$100,000 >HK$100,000 - HK$200,000 >HK$200,000 - HK$500,000 >HK$500,000 - HK$1m >HK$1m - HK$5m >HK$5m Refusals All stock traders Type of stock trader (2011) Stock-only Stock-andderivatives Equity Warrant CBBC Warrant CBBC ETF Median*(HK$) 468, , ,000 3,000, ,000 3,060,000 5,180,000 3,500,000 1,000,000 Aggregate % # share of total % 99% % 36% # The aggregate percentage share of the total transaction value by stock traders who are equity-, warrant-, CBBC- and ETF- do not add up to 10 because the investor types are not mutually exclusive to each other. Notes: (1) Stock transaction value refers to transactions in all HKEx cash market products. (2) Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

24 Table 7. Trading pattern of stock traders by trading frequency (2011) In the 12-month period preceding the interview All stock traders Low (1 4 times) By trading frequency Medium (5 10 times) High (>10 times) Number as % of all stock traders # % 23.6% 46.2% Average value per stock transaction HK$20, % 34.2% 33.5% 24.3% > HK$100, % 9.2% 8.6% 9.6% Median* (HK$ 000) Implied total stock transaction value HK$100, % 58.6% 22.7% 1.9% > HK$1,000, % % Median* (HK$ 000) ,680 Aggregate implied total stock transaction value As % of total by all stock traders % 5.3% 91.9% # The percentage of low-, medium- and high-frequency stock traders did not add up to 10 due to refusal of some respondents to answer the question Pattern in the HKEx equity/etf market The 2011 survey asked separately for the first time about the securities transactions of in equities/etfs 12 and that in warrants/cbbcs. For the trading activity in equities/etfs: For stock as a whole (99% of them invested in equities and 2 in ETFs): o of stock did not trade equities/etfs at all in the 12-month period in o o o o The median number of equity/etf transactions was 6 in Excluding non-trading stock, the median number of equity/etf transactions was 10; The median average value per equity/etf transaction was HK$40,000; The median implied total equity/etf transaction value per stock trader in the 12-month period was HK$400,000. These findings were similar to those for stock transactions by stock. Compared with equity, ETF : o o o Tended to trade equities/etfs more frequently (a median of 12 transactions in the 12-month period vs 6 transactions for equity ); Tended to have a relatively higher average value per equity/etf transaction (a median of HK$50,000 vs HK$40,000) and a larger implied total equity/etf transaction value during the 12-month period (a median of HK$1 million vs HK$0.4 million); and In aggregate contributed an estimated 37% of total retail equity/etf trading. 12 The survey asked about trading activity in securities other than warrants/cbbcs, which would comprise equities, ETFs and debt securities. Since trading of debt securities on the HKEx securities market contributed negligible share of the market total (0.0 in 2011), the responses were considered reflecting the pattern of equity/etf transactions. HKEX RETAIL INVESTOR SURVEY

25 Compared with equity as a whole, equity-only (constituting 72% of stock ): o o o Tended to trade equities/etfs less frequently (a median of 4 transactions in the 12-month period vs 6 transactions for equity ) with a larger proportion not traded at all (22% vs ); Tended to have a similar average value per equity/etf transaction (a median of HK$40,000 for both) and a smaller implied total equity/etf transaction value during the 12-month period (a median of HK$250,000 vs HK$400,000); and In aggregate contributed an estimated 49% of total retail equity/etf trading. For ETF-only (constituting only of stock ): o The trading pattern was very diverse 55% did not trade in the period while 35% traded more than 10 transactions. Note: Due to the small sample size, the findings on the trading pattern of ETF-only are subject to large error and are indicative only. 10 Figure 12. Number of equity/etf transactions in the past 12 months by stock investor type (2011) Number of equity/fund/bond transactions in the past 12 months by stock investor type (2011) 8 36% 36% 28% 5 35% 6 8% 9% 4 8% 8% 1 1 All stock Equity 22% Equity-only 7% 7% 9% 1 ETF 55% ETF-only Median* (incl. non-trading ) Median* (excl. non-trading ) Nil More than 10 Refusals All stock Note: Percentages may not add up to 10 due to rounding. Equity Equity-only ETF ETF-only HKEX RETAIL INVESTOR SURVEY

26 Figure Average value per equity/etf transaction in the past 12 months of stock traders Average value per equity/fund/bond transaction by type in (2011) the past 12 months of stock traders by type (2011) 2% 2% 2% 5% 1 1 9% 28% % 39% 37% 39% 72% 29% 29% 32% 23% Stock traders Equity Equity-only ETF ETF-only HK$20,000 >HK$20,000 - HK$50,000 >HK$50,000 - HK$100,000 >HK$100,000 Refusals Stock traders Equity Equity-only ETF ETF-only Median* (HK$) 40,000 40,000 40,000 50,000 *** *** Due to the significant proportion of refusals and the small sample size, the statistics are not reliable and are therefore not presented. Note: Percentages may not add up to 10 due to rounding. HKEX RETAIL INVESTOR SURVEY

27 Figure 14. Implied total equity/etf transaction value in the past 12 months of stock traders Implied total equity/fund/bond transaction by type value in (2011) the past 12 months of stock traders by type (2011) % 2% 6% 2% 1 1 5% 24% 24% Stock traders Equity 29% Equity-only 25% 9% ETF 28% 3 42% ETF-only HK$100,000 >HK$100,000 - HK$200,000 >HK$200,000 - HK$500,000 >HK$500,000 - HK$1m >HK$1m - HK$5m >HK$5m Refusals Stock traders Equity Equity-only ETF ETF-only Median* (HK$) 400, , ,000 1,000,000 *** Aggregate % share of total # 10 ~ 10 49% 37% *** # The aggregate percentage share of the total equity/etf transaction value by stock traders who are equity-, and ETF- do not add up to 10 because the investor types are not mutually exclusive to each other. *** Due to the significant proportion of refusals and the small sample size, the statistics are not reliable and are therefore not presented. Note: Percentages may not add up to 10 due to rounding Pattern in the HKEx warrant/cbbc market For the trading activity of stock in warrants/cbbcs: The majority of warrant (53%) did not invest in CBBCs while the majority of CBBC (56%) invested also in warrants. 8% of warrant/cbbc did not trade warrants/cbbcs at all in the 12-month period in The median number of warrant/cbbc transactions among all warrant/cbbc was 10 in The median average value per warrant/cbbc transaction was HK$20,000, compared to HK$40,000 for equity/etf transactions. The median implied total warrant/cbbc transaction value per investor in the 12-month period was HK$400,000, the same as for equity/etf transactions. HKEX RETAIL INVESTOR SURVEY

28 Compared with warrant, CBBC : o Tended to trade warrants/cbbcs much more frequently in the 12-month period (a median of 48 transactions; 59% had more than 20 transactions vs 42%); o Tended to have a similar average value per transaction (a median of HK$20,000); o Tended to have a much higher implied total warrant/cbbc transaction value 13 during the 12-month period (a median of HK$960,000 vs HK$400,000); and o In aggregate, they contributed an estimated 83% of total retail trading in warrants/cbbcs. Figure 15. Number of warrant/cbbc transactions in the past 12 months (2011) 10 Number of warrant/cbbc transactions in the past 12 months by stock investor type (2011) 8 43% 42% 59% 6 8% 4% 4 2 4% 5% 1 2 4% 7% 8% 1 Warrant/ CBBC Warrant 1 3% 5% 3% CBBC Nil More than 20 Refusals Warrant/CBBC Warrant CBBC Median* (incl. non-trading ) Median* (excl. non-trading ) Note: Percentages may not add up to 10 due to rounding. 13 The implied total warrant/cbbc transaction value during the 12-month period for a respondent was deduced from the respondent s average value per transaction and his/her frequency of trading in warrants/cbbc during the 12-month period. The figure counts both buying and selling transactions and is subject to estimation error. HKEX RETAIL INVESTOR SURVEY

29 Figure 16. Average value per warrant/cbbc transaction in the past 12 months (2011) 10 8 Average value per warrant/cbbc transaction in the past 12 months of stock traders by type (2011) 2% 2% 3% 3% 3% 3% % 36% 32% 4 52% 47% 5 Warrant/CBBC Warrant CBBC HK$20,000 >HK$20,000 - HK$50,000 >HK$50,000 - HK$100,000 >HK$100,000 Refusals Warrant/CBBC Warrant CBBC Median* (HK$) 20,000 20,000 20,000 Note: Percentages may not add up to 10 due to rounding. Figure 17. Implied total warrant/cbbc transaction value in the past 12 months (2011) Implied total warrant/cbbc transaction value in the past 12 months of stock traders by type (2011) % 3% 3% 2 24% % 6% 2 27% Warrant/CBBC Warrant/CBBC Warrant CBBC Median* (HK$) 400, , ,000 Aggregate % share of total # 10 77% 83% # The aggregate percentage share of the total warrant/cbbc transaction value by traders who are warrant- and CBBC- do not add up to 10 because the investor types are not mutually exclusive to each other. Note: Percentages may not add up to 10 due to rounding. 32% Warrant 7% CBBC HK$100,000 >HK$100,000 - HK$200,000 >HK$200,000 - HK$500,000 >HK$500,000 - HK$1m >HK$1m - HK$5m >HK$5m Refusals HKEX RETAIL INVESTOR SURVEY

30 5.4 Relationship between stockholding value and trading pattern of stock Broadly speaking, the higher the value of stocks held by a stock investor, the more frequently he/she tended to trade and the larger his/her deal size. Such relationship was significant in statistical terms, although at a low degree for relationship with number of transactions (rank correlation coefficient of 0.31) and a medium degree for relationship with deal size (rank correlation coefficient of 0.52). Table 8. Value of stockholdings (HK$) Number of stock transactions in the past 12 months by market value of stockholdings (2011) Mean* All stock Median* Number of stock transactions % of nil transactions Mean* Stock traders Median* Nil , % 20 4 >20,000 50, >50, , % 34 6 >100, , % >200, , % >500,000 1,000, % >1,000, % Refusals % Overall Correlation coefficient # Pearson correlation Rank correlation : Not applicable since by definition, a stock investor must have had stock transactions if he/she was not holding stocks. # The correlation coefficients reflect the direction and the strength of association between market value of stockholdings (including nil) and number of stock transactions (including nil). The Pearson correlation is a parametric measure of the strength of linear dependence between the two variables. The rank correlation is a non-parametric measure of statistical dependence between the two variables. The correlations are significant at the 0. level (2-tailed). Note: Stockholdings and stock transactions are in respect of all HKEx cash market products. HKEX RETAIL INVESTOR SURVEY