China's Financial Information Service Industry: Prompt, Customized, and Enhanced Data Analysis
The financial services industry in China accounts for 6.8% of the global market, but its market data services only account for 3.1% of the global total. As China's financial industry continues to expand, market data services are expected to maintain an annual growth rate of 30%, reaching US$1.7 billion by 2015.
In the report China's Financial Information Service Industry, Celent examines the market's structure, competitive landscape, and trends. China's market data industry will move towards having more real time and customized content. In the area of services, stocks and bonds are the key focus, with the market for stock index futures and foreign exchanges also growing rapidly.
"The financial industry is developing rapidly in China. There is a growing number of financial institutions, all of which are potential customers of financial information services," says Hua Zhang, Analyst with Celent's Asian Financial Services Group and author of the report. "As the market continues to expand, there will be increased integration."
Key findings of the report include:
In 2011, the global financial information service industry attained a gross income of more than US$25 billion, with China's market contributing only US$780 million. This figure is expected to reach US$940 million in 2012.
There are three main reasons behind the smaller market size for financial information services in China: 1) the lower penetration rate of financial information services, 2) lower charges, and 3) the simpler financial industry in China.
The number of financial institutions in China is growing quickly. Celent estimates the number of branches of securities firms, number of mutual funds, and number of Sunshine private funds (China's hedge funds) will reach 6,500, 1,400, and 480 respectively by 2014. There are some 133 million retail investment accounts in China, with 1.05 million retail investors having more than 1 million RMB invested. In addition, there are more than 40 million mutual fund accounts. All these institutional and retail investors are potential customers of financial information services.
In the area of regulations, in 2006 the Chinese government required foreign financial information vendors including the Reuters Group, Bloomberg, and Dow Jones to sell their products through Xinhua's China Economic Information Service. In 2008, the regulation was revised to allow foreign-funded organizations to establish financial information service companies in China and provide data and information to customers directly; hence, such organizations have become strong competitors in China's financial information service market.
In terms of market share, Reuters, Bloomberg, and Wind are the biggest service providers. Almost all financial institutions use Wind's services, and a majority also use the services offered by Reuters or Bloomberg. Among the service providers of online financial information, Great Wisdom and JRJC are the biggest, with about 20% of their income derived from website advertising.
Going forward, China's financial information service industry will become more real time and have customized content, such as certain financial information services catering to hedge funds that are emerging in the market. There will be further industry integration, such as Chinese providers acquiring Hong Kong's information service providers to enter overseas markets. In the area of services, stocks and bonds are the key focus, and the information service market for stock index futures and foreign exchange is also growing rapidly; video financial services catering to retail investors are also emerging.