THIN TURNOVER:A sharp drop in retail investor activity because of poor prospects of return has slowed investment momentum, putting smaller brokers at risk, Fitch said

Taipei Times
Date: May 31, 2016
By: Crystal Hsu / Staff reporter

The local stock markets’ lackluster turnover is putting pressure on the profitability of local securities houses, and smaller brokers might exit the market as poor investment prospects might further dampen the appetite of retail investors, Fitch Ratings Inc said.

“Taiwanese securities firms are facing challenges to stay viable as retail investors increasingly avoid the domestic stock market,” the international ratings agency said in a recent report.

Growing competition from online brokers could accelerate the demise of unprofitable brokers, the report said. Retail investors make up more than 90 percent of Taiwanese securities firms’ customers, while institutional investors are mainly served by foreign brokers operating locally, Fitch said.

From 2011 to last year, average daily turnover on the local bourses was NT$111 billion (US$3.4 billion), down 20 percent from five years earlier, Fitch said.     [FULL  STORY]