The growth of China’s securities markets is creating opportunities for foreign technology vendors, according to a new report by financial research firm Celent.
The study, called 'Capital markets technology vendors in China', identified the growing scale of proprietary trading, increasing assets, the large scale development of hedge funds and the overseas expansion of international financial institutions as key development trends in the Chinese securities industry that would offer vendors new business opportunities. It also advised potential entrants to the market to focus on new business areas.
“For foreign vendors that are planning to enter China’s securities industry, a key focus should be securities companies that are more actively involved in new businesses,” said Hua Zhang, analyst with Celent’s Asian financial services group and author of the report. “This is because a large portion of the market for mature systems is saturated. Some examples of such new businesses are trading systems and valuation systems.”
Margin trading, stock index futures, brokerage services, futures funds and qualified foreign institutional investors were all identified by the study as areas of expertise that could provide demand for financial IT solutions.
At the end of 2010, there were 106 securities firms active in China that had a combined annual turnover was US$8.1 trillion, up 2.4% from the previous year, according to the report. There were 63 mutual funds companies with assets at US$46.2 billion, a decrease of 34% from the previous year.
The report also identified the market for business-related systems such as portfolio management, trading systems, valuation and risk management systems. It found this area to be highly concentrated, led by Hundsun Technologies, Shenzhen Kingdom Technology and SunGard. Hundsun has the largest market share with 48% of the trading system market, 54% of management systems and 43% of the stock index futures systems market.