HONG KONG (BLOOMBERG) - The growing retail frenzy has sent many stocks through the roof this year, from the most-shorted US names to anything silver related. But away from the chat rooms there's another winner: online brokerage shares.
Shenzhen-based Futu Holdings has surged 156 per cent already this year and Singapore-listed iFast Corp more than doubled. In South Korea, Kiwoom Securities is up more than 18 per cent. The moves have crushed the performance of a Bloomberg index of the region's institutional brokerage firms, which is up just 1 per cent over the same period.
The strong performance of this pocket of the market comes amid a rapid increase in the number of young retail investors. More than 50 per cent of Futu's new users are from the post-1990s generation and more than half are first time investors, Citigroup analysts including Daphne Poon noted last week, citing a survey from the brokerage.
The Citi team doubled its Futu target price on Jan 22, after the Tencent-backed company became the only retail-focused broker in the top ten of Hong Kong brokerages by trading volume. The stock is just 2.3 per cent away from Citi's target price after recent rally.
Meanwhile, Seoul-based Kiwoom, whose trading app is popular among South Korea retail investors, doubled the number of its accounts to 7 million last year, amid a more than 30 per cent surge in the benchmark Kospi Index, according to the company.
In additional to the retail frenzy, Singapore's iFast, a wealth management fintech platform that caters to digital-savvy customers, will benefit from its partnership with Hong Kong's PCCW Solutions, according to a note from Jefferies Financial Group Inc. PCCW just won the contract to digitise Hong Kong's retirement fund system.
Jefferies boosted its target price for iFast to $7.80, implying about 15 per cent upside from Tuesday's levels. On Wednesday, iFast shares were trading up $0.08 or 1.2 per cent at $6.86 at 10.21am local time.
Asia's online brokerages are benefitting from a surge of retail trading activity in the region, particularly in small-cap stocks. More than 350 billion shares of MSCI Asia Pacific Small Cap Index members changed hands in January, extending a volume spike in December that eclipsed any month since May 2009.
