Young Chinese Fuels the Country’s Online Retail Trade

Chinese millennials in the country are using mobile apps to trade stocks, according to a report.

China already has the largest online retail securities market in the world, and this can go bigger. Oliver Wyman, a consulting firm, forecast that the country’s online retail trade volume may triple to $1.36 trillion from $445 billion in 2018.

These young investors often trade stocks of Chinese tech giants like Alibaba and other locally based companies listed in Hong Kong and the U.S.

Cliff Sheng, a partner at Oliver Wyman, expressed his optimism on the Chinese youth’s growing engagement on online trading brokers. He also said that the ‘less techy,’ older population is quickly transferring from the traditional brokerage firms to online or mobile ones.

One of the start-ups trailblazing the trend is the Hong Kong-based Futu. The online broker raised $90 million in an initial public offering on the Nasdaq on March 8. Since then, the stock has surged more than 50% in the following days, boosting the company’s value to more than $2 billion.

Analysts also expect Beijing-based Tiger Brokers to follow Futu’s footstep. They predict that the trading app will raise more than $100 million in a Nasdaq listing soon.

While the valuation of Chinese-based apps is small compared to their U.S. counterparts like E-Trade and TD Ameritrade, they were able to capture a significant portion of tech-savvy millennials who want to profit from stock trading on their phones.

This development in Chinese online trading has been under the radar by some U.S. online brokers. In September 2017, Connecticut-based Interactive Brokers announced it would invest in Tiger Brokers worth up to $7 million. The partnership allowed Tiger to rely on Interactive Brokers in executing, settling and clearing a large portion of the trades of US and Hong Kong stocks and other investment instruments.