The Zhitong Finance App learned that Cathay Pacific Haitong released a research report stating that in 2028, the business space of brokerage firms in Hong Kong, China will exceed HK$350 billion, and they are optimistic that the penetration rate of domestic brokerage firms in the Hong Kong market will increase, driving the accelerated growth of international business. In 2028, the international business space of Hong Kong brokerage firms is expected to be HK$354.4 billion, a compound growth rate of 12% in 25-28; if domestic brokers' share of the international subsidiary market reaches 47%, it will correspond to a compound growth rate of 31% in international business revenue and 50% compound net profit growth rate in 25-28. In terms of investment advice, I am more optimistic about the growth of leading brokerage firms, and recommend leading brokerage firms with international business layouts.
Cathay Pacific Haitong's main views are as follows:
How vast is the ocean of stars for brokers' international business?
The bank determined that in 2028, the brokers' business space in Hong Kong, China would exceed HK$350 billion. Hong Kong, China is a bridgehead for domestic brokerage firms to develop international business. In recent years, brokers' business boundaries in the Hong Kong market have continued to expand. We are optimistic that the penetration rate of domestic brokerage firms in the Hong Kong market will increase in the future, driving the accelerated growth of international business. In 2028, the international business space of Hong Kong brokerage firms is expected to be HK$354.4 billion, a compound growth rate of 12% in 25-28; if domestic brokers' share of the international subsidiary market reaches 47%, it will correspond to a compound growth rate of 31% in international business revenue and 50% compound net profit growth rate in 25-28.
The asset-light business continues to benefit from the boom in the Hong Kong stock market. Investment banking advantages are expected to be consolidated, and there is still room for improvement in brokerage and asset management market share
1) In terms of brokerage business, the recovery in Hong Kong stock trading in recent years, the increase in overseas trading demand and product expansion have helped Hong Kong's brokerage business grow rapidly. The market space for Hong Kong brokerage business is expected to reach HK$53.5 billion /CAGR 6% in 25-28 in 2028; however, in recent years, the market share of Hong Kong stock transactions of overseas subsidiaries of domestic brokerage firms has fluctuated 5% to 7%, and has not yet formed a continuous upward trend. 2) In terms of investment banking business, domestic brokerage firms have a stable dominant position in the Hong Kong stock IPO market, with a market share of over 60%, and are gradually expanding their refinancing and Asian bond underwriting business. Currently, their market share is 34% and 11%; they are optimistic that the subsequent Hong Kong stock equity financing boom will remain high. The market space for Hong Kong brokerage investment banking business is estimated at HK$22.8 billion in 2028/CAGR 6% in 25-28. 3) In terms of asset management business, with the release of global asset allocation needs from domestic and foreign residents, Hong Kong, China has a stable position as a cross-border wealth center. It is estimated that in 2028, the asset management business space of Hong Kong brokerage firms will reach HK$63.5 billion /CAGR 9% in 25-28. Currently, the Hong Kong asset management and wealth market is dominated by large asset management institutions, and the market share of Chinese institutions is only 9%.
Steady expansion of tables+expansion of business boundaries, capital-heavy business has become an important pillar for the international growth of brokerage firms
1) In terms of credit business, the Hong Kong stock market has picked up in recent years and risk appetite has improved. It is optimistic that the Hong Kong credit market space will reach HK$28.1 billion in 2028. Domestic brokerage firms will shift from contraction to expansion of Hong Kong's credit business. Currently, margin market share is 28%, and there is still room for improvement. 2) In terms of on-market derivatives business, benefiting from product expansion and active trading, it is estimated that in 2028, Hong Kong's on-market derivatives business space will reach HK$9.5 billion /CAGR 6% in 25-28. Currently, China's leading brokerage firms have a layout in the market for some products, and the issuance market share of bull and bear certificates and derivative warrants is 10% and 25%. 3) In terms of OTC derivatives business, as demand for overseas asset allocation grows, we are optimistic about the expansion of Hong Kong's OTC derivatives market. Domestic brokers' cross-border OTC derivatives business space is expected to reach HK$26.7 billion in 2028, while Hong Kong's OTC derivatives business revenue space will reach HK$62.9 billion /CAGR 11% in 25-28. Currently, domestic brokerage firms are mainly engaged in cross-border business, and the penetration rate of OTC derivatives in Hong Kong is low. 4) In terms of FICC business, the Hong Kong bond market is vast, and connectivity and RMB internationalization continue to create bond and foreign exchange trading opportunities. It is estimated that in 2028, the Hong Kong FICC market space will reach HK$20.6 billion /CAGR 8% in 25-28. Currently, domestic brokerage firms have limited participation, and related businesses are still being explored.
Investment advice: The blue ocean of international business is vast, and I am more optimistic about the growth of leading brokerage firms. We recommend CITIC Securities, Guangfa Securities, CICC H, and Huatai Securities, which have leading international business layouts.
Risk warning: There are errors in the calculation assumptions; large fluctuations in the capital market; geopolitical risks.