Friday, July 6, 2001

Online Trading Accounts in Asia will Skyrocket

According to a recent research effort by International Data Corporation (IDC) on eInvesting in Asia/Pacific, online trading accounts in Asia/Pacific (excluding Japan) will enjoy strong growth over the next five years, despite the bearish economic outlook. The total number of online trading accounts in Asia/Pacific (excluding Japan) is forecast to increase from 8 million in 2000 to over 42 million in 2005 at a 39% compound annual growth rate (CAGR).

"The securities industry in Asia/Pacific is facing unprecedented challenges and opportunities brought about by the emergence of new digital channels, market deregulation, industry consolidation and shrinking stock turnover", said Kit Yau, Online Financial Services Research Manager at IDC Asia/Pacific. "Including the Internet and wireless devices into the array of trading channels is becoming a prerequisite to remain competitive".

The regional marketplace is crowded with local and regional traditional brokerage firms, bank-backed securities arms and multi-national pure-play heavyweights. In addition to being crowded, the regional marketplace is highly fragmented with different leaders in each of the key markets. Each category of players has its own competitive assets; however, local competitors are holding their own against foreign challengers and leading their domestic online trading markets.

"It is important to sign up new customers as soon as possible and convert existing clients to online trading," Ms. Yau continues. "But, in order to be successful in the long-term, firms will need to aggregate client assets and provide a strong customer relationship management (CRM) solution".

Among the top stock markets in Asia/Pacific (excluding Japan), Korea's stock exchange has generated the greatest online trading growth. In 2000, over 50% of Korea's total stock turnover was conducted through the Internet, up from over 20% in 1999. 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.

China is another market that should not be overlooked in the regional landscape. Online trading in China has grown dramatically over the past two years. Individual investors in the PRC are very receptive to self-directed channels. China's regulatory framework is being designed to create a level playing field for all brokerage firms seeking online trading opportunities. IDC estimates that by 2005, 22% of all trading accounts will be online in China.