FRAMINGHAM, Massachusetts, 19 May 2000 - IDC said in a statement that pure-play online brokerages are popping up across Asia, and an increasing number of the region's traditional brokerages are offering online trading.
"As of year end 1999, online trading in Asia Pacific was in an extremely nascent state," said Matthew McGarvey, a research analyst in IDC's Hong Kong office.
"However, with the growing popularity of the Internet and the general increasing comfort and trust in Internet security, online trading will experience explosive growth and popularity within the region in the next five years."
In 1999, less than 10% of the region's trades was conducted online, IDC noted. By 2004, IDC expects 40% of Asia Pacific's trades to be online. During that same time frame, the number of investors using the Internet for their transactions will increase from less than 2.77 million to 20 million.
"Online brokers will have to prepare themselves to handle heavy spikes in the market," McGarvey warned. IDC expects much of the growth in Asia Pacific's online trading to occur between 2002 and 2004.
The region's online trading market will have the advantage of learning from the US market. "Asia Pacific has been able to follow the rise and fall of many online brokerage companies in the West and thus will not have to reinvent the wheel," McGarvey said.
"Nevertheless, many aspects of online trading will take on unique characteristics in the region. Asia Pacific will place a higher priority on online brokerages' ability to access the numerous markets in the region, conduct transactions in multiple currencies, and offer regional-specific research."
IDC also said that online brokerages expanding from the US market to Asia Pacific will flourish in the short term, but will soon lose out to indigenous firms with established histories and reputations within the region.
"Asian companies will have the advantage of being the home team players."