Date
24 January 2017
Some brokerages continue to invest in a down-cycle, betting that investor confidence will recover and transaction volumes will soar again. Photo: Bloomberg
Some brokerages continue to invest in a down-cycle, betting that investor confidence will recover and transaction volumes will soar again. Photo: Bloomberg

It’s the worst time for brokers, or may be not

Plunging stock prices and lackluster trading are not necessarily bad news, if you know how to manage the gloom.

Local brokerage Bright Smart Securities (01248.HK) distributed HK$1 million worth of gifts and prizes during its annual dinner over the weekend.

Employees were also promised a certain bonus and a wage hike.

Is that strange? Not at all, by the company’s logic.

First of all, 2015 wasn’t such a bad year.

In the first half, Hong Kong shares were on a roll. Transaction volumes scaled new heights and Bright Smart’s profit doubled year on year during the period.

Even though things worsened in the second half, these had little impact on Bright Smart — it had made its money in the first half equivalent to its full-year earnings in 2014.

Second, the company has a long-term vision.

“The market is quiet now but it’s the ideal time to upgrade and attract talent,” chairman Yip Mow-lum said.

“When investor confidence returns, transaction volumes will again rise. If we wait till that time to expand our operations and add manpower, it will be too late.”

Investors should perhaps take a leaf out of Yip’s playbook and treat the weak market as a time to position themselves for the next boom.

It takes financial strength and guts to expand in a down cycle but the reward could be huge.

– Contact us at [email protected]

RA

EJ Insight writer

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