Magazine article Business Asia

Top Brokers Lengthen Lead

Magazine article Business Asia

Top Brokers Lengthen Lead

Article excerpt

The biggest, best-capitalised brokerages are starting to run away from the pack in the Hong Kong and China equity market, in both research and commissions, according to a new survey.

The 1999 Reuters Survey of Hong Kong and China Companies, the second annual survey in this market, was conducted by Tempest Consultants.

Tempest found that the top three sell-side houses won 48 per cent of the institutional commissions, even though they won only 31 per cent of the top votes for research ranking. The top five sell-side houses won 67 per cent of commissions and 43 per cent of research votes.

Fund managers were not asked to identify who they paid commissions to, but when asked to rate brokers by sales trading, they ranked Merrill Lynch, Goldman Sachs and Warburg Dillon Read well above the rest. Merrill Lynch had 15.27 per cent of the top sales trading vote, Goldman Sachs 15.19 per cent and Warburg Dillon Read 14.58 per cent.

"This underlines the importance of sales and sales trading as factors influencing the allocation of commission," Tempest said in the survey.

"It also emphasises the high degree of concentration that has occurred. The rewards for achieving top five status are disproportionately large," Tempest said.

The survey said that fund managers were showing increasing confidence in those firms that could commit capital to ensure liquidity.

At the same time, the top houses were pulling ahead of the pack in terms of research votes. …

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