Political instability in Hong Kong to have limited impact on Monex revenues

Maria Nikolova

The revenue impact on Monex Boom Securities from the prolonged political instability in Hong Kong is limited, the brokerage said today.

Online trading expert Monex Group, Inc. (TYO:8698), which has operations in several markets, such as Japan, Hong Kong, and the United States, has earlier today posted its financial results for the third quarter of the fiscal year to end-March 2020.

Regarding the Group’s business in Hong Kong, Monex said today that the revenue impact on Monex Boom Securities from the prolonged political instability in Hong Kong is limited.

In terms of numbers, the broker explains that, due to Monex Boom Securities’ bad debt reserve of ¥0.11 billion for its margin loan, segment loss was ¥0.1 billion. The loan loss provision ratio is 100% with bad debt reserve in 2Q. Monex Boom remains profitable excluding the provision.

Cherry Technology Co., Ltd (China), which provides technology and knowledge of online brokerage business through a joint venture in PRC, recorded profit of equity method investments for the last eleven consecutive quarters.

Regarding the Japanese segment, Monex outlined some strategic priorities. The segment plans to transform from a brokerage-model to an asset-management model that aims to increase client assets after deducting commissions and management fees. Japan Catalyst, Inc. will drive the development of asset-management and asset-creation businesses.

Monex Group is establishing an engagement investment fund for Monex Securities customers. The fund will seek for investment returns for retail investors as well as corporates’ growth through long-term engagement with the perspective of retail investors, who are the ultimate beneficiary owners of companies.

There are new business initiatives in store for the US business too, including the introduction of an education platform, plans to offset commission decline resulting from customers’ shift to TS Go/Select and to further increase and diversify its revenue stream in the medium-term.

Due to lower interest rate environment and offering commission-free trading, the US segment profit dropped to ¥0.3 billion in the third quarter of FY2020.

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