Sun Hung Kai Financial battles for rich clients
Venerable firm's chief sees wealth management as a major future revenue stream, but William Leung Wing-cheung faces ferocious competition
A commission price war raging among brokerages prompted Sun Hung Kai Financial's move into wealth management, but the diversification strategy is opening up new battles for one of the oldest names in finance in Hong Kong. With many international and local banks keen to expand in the fast-growing sector, SHK Financial is trying to push deeper into a crowded market.
Still, CEO William Leung Wing-cheung, a former top banker in Hong Kong, told the South China Morning Post that he expects the firm's wealth management business to become the biggest revenue driver in five years, from less than half now.
Leung sees a key point of difference between the nature of the competition in wealth management and stockbroking.
"A price war on the commission of wealth management products was unlikely because investors always need someone to talk to when making an investment with a large sum of money," says Leung, a former senior executive at Hang Seng Bank.
"Stock trading commissions have become lower because much of the human costs have been replaced by computers."
In July, another well-known major local brokerage, King Fook Securities - owned by listed King Fook Holdings - said it would close its business after sluggish transaction volumes and surging costs forced the parent company's hand. The 42-year-old local securities firm had been losing money since 2009.
Hong Kong had 507 brokerage firms at the end of June, down from 511 at the end of last year. The top 65 accounted for more than 90 per cent of market turnover at the end of April, stock exchange figures show.