Investors eager for options, FX firms discover

Easyforex.com is just one of the many international trading providers that are eager to tap deeper into China, where a growing number of investors, flush with new wealth, are increasingly looking overseas for high returns.

Nicolas Shamtanis, chief of business development for the retail broker - a service of Marshall Islands-based EF Worldwide Ltd - that operates in more than 160 countries, could hardly hide his enthusiasm during an interview in Shanghai on Tuesday.

"In just 10 minutes from opening an account, a trader can get into the excitement of the global financial markets."

He has reason to be excited. In just a few years, transactions by Chinese investors have quickly grown to make up 20 percent of the company's trading volume. Chinese investors also hold 20 percent of its accounts. The broker provides online trading in currencies, indexes, metals, agricultural commodities, energy commodities and options, via desktop or mobile platforms.

"We have a lot of marketing campaigns in the pipeline here in China, which has quickly risen to be one of the most important markets for us," said Bao Liya, head of China marketing.

It's not just Easyforex. The iFXEXPO, which is among the largest foreign exchange trading events, attracted more than 1,000 foreign exchange industry companies to an event in Macao. Another event, the 10th China International Investment and Finance Expo, which takes place the first week of March in Guangzhou, was also packed with trade brokers eager to get a bigger share of the market.

Easyforex caters mainly to retail investors, who can open an account with as little as $25. The low threshold is especially appealing in China, where retail investors dominate capital markets.

According to the China Securities Regulatory Commission, 81 percent of the domestic stock accounts have balances of less than 100,000 yuan ($16,060), and these presumably belong to retail clients. By comparison, only 10 percent of direct stock market investors in the US are retail.

With a lack of investment options, the stock market is effectively Chinese investors' only choice, but its poor performance over the years has prompted many to look abroad.

A survey released last month by Legg Mason Inc, one of the world's biggest asset management companies, said 88 percent of Chinese investors are more interested in investing overseas now than five years ago.

About 40 percent said they had already started moving money from emerging markets to developed markets since last year.

Retail investors in China are still subject to capital controls. They can only convert $50,000 worth of foreign currency a year, which limits their access to foreign markets.

Nicolas said he expects Beijing to gradually loosen controls as China proceeds with its financial reforms. "But even if the government doesn't, the market is still huge given the size of China's population," he said.