As Hong Kong's stock market surges, are the good times back for big …
Car trader Paul Law predicts sales at his company could be 10 per cent higher than normal for this time of year. Photo: Nora Tam
To some, the fun ride has only just begun.
“Sales have been better,” Paul Law Siu-hung, chairman of Olympic Motor Group and a used car dealer, admits cheerfully.
He says the recent rally in stocks gave a welcome boost to his car business.
“Some stock traders took quick profit and bought a car at once to reward themselves.
“It’s all about the mood … People will spend and enjoy first when they expect their wealth to increase.”
People who have not made enough money in the stock market to buy a flat, which these days is likely to cost several million dollars, may instead spend some of the windfall on their first or next car, Law explains.
“HK$100,000 to HK$200,000 would give you a wide choice of vehicles,” he says.
But the seasoned car retailer, who also trades stocks, refuses to get carried away. If the market surge continues, he says, many traders may not be so willing to shell out their recent gains on cars and might instead want to reinvest the money in shares.
Still, he predicts that the total sales of his company could be 5 to 10 per cent higher than normal for this time of year because of this powerful spur on consumption.
This pace of sales growth is not to be sniffed at, given the sluggish conditions faced by many companies in this city for several years now.
But some sectors have clearly outperformed others in this stock market boom. However fleeting this exuberance may be, one clear winner is the brokerage industry, simply because more people will trade and trade often.
The impetus came partly from the mainland authorities’ decision late last month to allow its domestic mutual funds to use the Shanghai-Hong Kong Stock Connect Scheme, which links the mainland and Hong Kong stock markets. Hong Kong’s Hang Seng index has since continued to soar and hit new seven-year highs.
As more money poured into the city’s bourse, daily trading volume also hit new record highs, surging above HK$200 billion on seven out of the eight trading days over the past two weeks, about three times the average daily turnover three weeks ago.
“Sales volume [of my brokerage business] has doubled since the announcement of the Chinese authorities’ decision,” says the lawmaker for the financial services sector, Christopher Cheung Wah-fung, a veteran broker.
“Commission income also doubled accordingly.”
Asked whether he has been spending his windfall, he says: “I am too busy to spend. My schedule is so packed that I even need to ask my colleagues to take care of the business for me.”
Cheung recently led a delegation to meet Shenzhen officials to discuss plans to connect the southern mainland city to Hong Kong’s capital market, after the launch of the Shanghai-Hong Kong Stock Connect in November 2014.
But with high trading volumes becoming the new normal, more brokerage houses are planning to invest in upgrading their systems to cope with the deluge, he says.
So, are the glory days back? Are lunching stock traders tucking into their fabled yue chi lou fan, or braised shark fin mixed with rice – an expression widely used to describe the lavish lifestyle of older generations of traders who made a fortune on the stock market?
Cheung says just generating more business is the priority.
“It’s still too early to say if the current bull market rally can be sustained … We need to wait for at least three to six months.
“A sustainable market boom can in the long term stimulate consumption.”
Losing out?
Luxury brands and their recent comparable sales
Chow Tai Fook Jewellery HK & Macau (last quarter) – down 26 per cent
Luk Fook HK & Macau (last quarter) – down 22 per cent
Burberry HK (six months ending March) a mid-single digit percentage fall
This article appeared in the South China Morning Post print edition as Are the good times back for big spenders?
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As Hong Kong's stock market surges, are the good times back for big …
