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China has been the focus of many FX firms for quite some time now, and it is very easy to understand the rationale behind the industry-wide drive toward attracting clients from the Far East.
Although the entry barriers are high due to stringent government restrictions on overseas business, many FX companies have achieved a substantial client base contributing to large volumes from mainland China.
Today, the results of a survey by North American financial conglomerate State Street Corp (NYSE:STT) have borne this out even further, concluding that Chinese retail investors trade far more frequently than any not only any other region with an advanced financial markets economy, but any nation on earth.
In a report today by CNN, the results of State Street’s survey showed that eighty-one percent of retail investors in China surveyed said they trade at least once a month.
Likewise, 73% of investors in Hong Kong said they trade monthly or more often in stocks, bonds, currencies and other securities.
Those are very high figures, especially considering just 53% of Americans and 32% of French investors say they trade monthly or more often.
Indeed, LeapRate recently stated in a TV interview that the vast majority of mainland Western European nations do not constitute any significant part of the global electronic trading ecosystem.
It is widely understood in the FX industry that Chinese investors have a different view on trading to those in the West. The survey reflects this line of thinking, with American traders mainly participating in order to invest in their retirement, whereas Chinese investors by and large trade because it is enjoyable.
Suzanne Duncan, global head of research at State Street’s Center for Applied Research stated “It is fun, it is what they do as a hobby.”
here’s a saying in China that the domestic equity market is a “better casino than Macau,” a Shanghai-based financial professional told CNNMoney.
“It’s hard to find people not trading stocks these days, especially in big cities. It’s the best pastime for the retired,” she said.
Whilst Hong Kong has long been a center for stock investing, and its residents are largely financially astute, taking a long term view on investing for the future, China’s youthful and urbane trading population are not risk averse and have a far more laisse-faire approach toward trading, and due to the local economy’s rapid expansion and a necessity to conduct business away from traditional venues, FX is king in China.
Chart courtesy of State Street