Overseas investors' participation in Hong Kong's futures and options market
remained significant and their contribution surpassed that of local investors for two
consecutive years, according to Hong Kong Exchanges and Clearing Limited's (HKEx)
Derivatives Market Transaction Survey 2012/13.
In 2012/13, the total market turnover for the products under study was 125m
contracts, down 7 percent from 135m contracts in 2011/12. Stock options remained
the dominant product, contributing 48 percent of the total market turnover (as
measured by contract volume).
HKEx participants (EP), comprising market maker and proprietary trading, contributed
49 percent of total market turnover, with overseas investors contributing 27
percent (compared to 26 percent in 2011/12), and local investors contributing
23 per cent (compared to 24 percent in the previous year.
On the other hand, retail investors contributed 21 percent of total market
turnover (the same as in 2011/12), mostly from local retail investors (18 percent).
Institutional investors contributed 30 percent in 2012/13 (compared to 29 percent
last year), most of this (24 percent) being from overseas institutional investors.
For Hang Seng Index futures (HSI) and H-shares Index (HHI) futures, overseas
institutional investors were the major contributors with 49 percent and 58 percent
of the product's turnover respectively. On the other hand, for Mini-HSI
and Mini-HHI futures, the major contributor was local retail investors (44 percent
and 49 percent respectively).
For HSI and HHI options, EP principal trading was dominant – 50 percent,
with 42 percent from market making, and 51 per cent, 29 percent from market
making and 22 percent from proprietary trading.
Among overseas investors, United Kingdom investors and Continental European
investors were the two largest contributors to overseas investor trading (28
percent and 27 percent respectively). They were followed by US investors (18
percent). Almost all trading from these origins came from institutional investors
(over 95 percent).
The aggregate contribution from investors in Asia outside Hong Kong was 23
percent of overseas investor trading, mainly from Mainland China and Singapore
(10 percent and 8 percent respectively).
A comprehensive report in our Intelligence Report series
giving a country-by-country analysis of offshore investment funds, stock exchanges
and trusts, with an analysis of the US QI regime, is available in the Lowtax
Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp
and a description of the report can be seen at