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China to Lead Online Trading in Next Five Year
China will lead the Asia Pacific online trading in the next five years, a senior economist predicted Tuesday.
"China is the market that should not be overlooked in the landscape," said Kit Yau, online financial services research manager at International Data Corporation (IDC) Asia Pacific.
Online trading in China has grown dramatically over the past two years and the individual investors throughout the country are very receptive to self-directed channels, Yau added.
China's regulatory framework is being designed to create a level playing field for all brokerage firms seeking online trading opportunities. IDC economists estimated that by 2005, 22 percent of all online trading accounts of the region will be in China.
Among the top stock markets in the Asia Pacific region, South Korea will continue to lead the regional market from a volume perspective, but its absolute growth will slow down since its base is already very large, although its stock exchange has generated the greatest online trading growth, IDC economists believed.
According to a recent research effort by International Data Corporation (IDC) on e-investing in Asia Pacific region, the total number of online trading accounts in the region is forecast to increase from 8 million in 2000 to over 42 million in 2005 at a 39 percent compound annual growth rate.
Despite the bearish economic outlook, online trading accounts in Asia Pacific region will enjoy strong growth over the next five years.
The securities industry in the region is facing unprecedented challenges and opportunities brought about by the emergence of new digital channels, market deregulation, industry consolidation and shrinking stock turnover,
"Including the Internet and wireless devices into the array of trading channels is becoming a prerequisite to remain competitive, " Yau stressed.
Economists here believed that the regional marketplace is crowded with local and regional traditional brokerage firms, bank- backed securities arms and multi-national pure-play heavyweights, and is highly fragmented with different leaders in each of the key markets.
They also felt that each category of players has its own competitive assets, while local competitors are holding their own against foreign challengers, and therefore, it is important to sign up new customers as soon as possible and convert clients to online trading.
But, in order to be successful in the long-term, firms will need to aggregate client assets and provide a strong customer relationship management solution, they cautioned.
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