Fri, Jan 21, 2000 - Page 18 News List

Internet share trading grabs a quiet slice

CYBER-BROKERS Free computers helped kick-start the online trading trend, but it will be the long-term cost benefits that will help keep the momentum going

By Stanley Chou  /  STAFF REPORTER

In just a year, local Internet brokerages have managed to capture 3.61 percent of total trading on the Taiwan stock exchange, with analysts predicting further growth to come.

According to the Taiwan Stock Exchange, total Internet trading in December was NT$210 billion, or 3.61 percent of total market trading, compared to 0.68 percent market share in January last year. A six-fold increase for the calendar year.

Analysts estimate that the fast growth of Internet trading in Taiwan could see the online trading sector double its market share to 8 percent or even higher by the end of the year.

Topping the market at the end of 1999 was Polaris Securities (寶來證券), with a total trading volume of NT$260 billion for the year, giving it a market share of 19.71 percent of online trades.

"Presently we have 27 brokerage branches doing traditional trading, meanwhile more than 10,000 transactions went through our Internet trading system every day," said Bai Win-chen (白文正), chairman of Polaris Securities. "The trading volume on the Internet is roughly equal to 10 of our branches' traditional trading volume."

If every brokerage in Taiwan had growth similar to Polaris Securities, the market share of Internet trading could rise to one-third in the next few years, said analysts.

"By the end of 2000, we expect Internet trading market share could double to 8 percent," said Dicky Dai (戴震), director of Russel Computer Network (儒碩電腦網路), an affiliate of Polaris Securities Group.

"We expect the market share of Internet trading could reach 20 percent of the total trading on the Taiwan Stock Exchange in the next three years," he said

"Although Lehman Brothers has recently predicted that Internet trading in Taiwan will reach a 20 percent market share in the near term, we still expect it will require three more years to reach that target," said Dai.

Since President Securities (統一證券) launched the first "free computer package" (全民利多方案) last September, dozens of other securities companies have followed with similar give-away packages.

Currently there are as many as 66 securities companies offering Internet trading services -- but still more than two-thirds of securities companies, mostly small-sized brokerages -- have not joined the party.

"Free computer packages were useful in the early stages of promoting Internet trading for those who do not own a personal computer or notebook computer," said Russel's Dai.

"But investors still have to pay for it. I think the biggest incentive for Internet trading will be the commission cost in the long-run. Presently we are giving a 35 percent discount to Internet trading clients, and many others also give similar discounts to their Internet trading clients.

"The higher the trading volume, the more attractive Internet trading will be for stock investors," Dai said.

Approximately 82,800 investors opened Internet trading accounts in December, with Polaris Securities leading the field attracting 11,900 of them.

Core Pacific Securities (京華證券) was second with 6,300, while Taiwan Securities (台証證券) managed 6,200, MasterLink Securities (元富證券) 5,900 and Fubon Securities (富邦證券) 5,300 accounts.

"With the increasing importance of Internet trading, securities companies that cannot participate in the trend will be forced to leave the market, sooner or later," said one analyst.

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