November 5, 2011
Inside Market Data - Special Report
Financial services firms
in China have doubled their market data spend over the past two
years, driven by growth among domestic vendors and the continuing
maturity of China’s financial industry, according to a new report
Burton-Taylor International Consulting LLC and Robert
Marlin & Associates.
The report estimates spend on financial information—including market data, news, research and analytics—by Chinese financial firms to be $745.4 million in 2011, compared to $342.6 million in 2009, and resulting in a compound annual growth rate of 41.2 percent since 2003.
Unlike in most major financial markets, domestic providers command a dramatically larger share of the market (76.2 percent), and as a group, domestic venders seem to be growing faster than international providers, which account for 23.8 percent, says Douglas B Taylor, managing director at Burton-Taylor.
“Possibly, international companies underestimate the differences in the cultural and business dynamics in China in terms of the relationships they have to build and how decisions are made by Chinese firms,” Taylor says. As well as an understanding of the culture, domestic vendors benefit from the familiarity of local contacts and tend to aggressively pursue new revenue opportunities, he adds.
But as China explores investments beyond its borders, opportunity will grow for global data vendors, as domestic players typically offer only limited international data, Taylor says.
Domestic vendor Wind Information, which provides the most complete set of local information, has the largest share of the Chinese data market, with a projected $85.2 million in revenue (compared to an estimated $34.8 million in 2009), followed by Da Zhi Hui, with projected 2011 revenues of $80.7 million (versus $24 million in 2009). However, while DZH derives significant revenue from retail operations, Wind caters primarily to professional users and is the most direct domestic competitor to Bloomberg and Thomson Reuters, the two largest global providers in China, Taylor says.
In 2009, Thomson Reuters led in overall market share in the country with an estimated $66 million in revenue from China. But in the past two years, Bloomberg—which earned $50 million in 2009—has grown at a faster pace to catch its rival, with both projected to earn $74.4 million from China in 2011.
Taylor attributes Bloomberg’s growth rate to the vendor’s increased emphasis on China and the continued development of local buy-side firms, whereas enterprise and datafeed sales—Thomson Reuters’ strength—are still minimal in China, though the increasing sophistication of the buy side may drive takeup as firms start to populate and manage their own databases of historical data to support investment strategy back-testing, risk management tools and other back-office functions, while increases in assets under management in China (projected to reach $5 trillion by 2020, generating an estimated $67.5 billion in fee revenue, compared to $37.5 billion this year) are expected to drive further spend.
“As assets under management grow, the number of funds increases and the market becomes more competitive. As a result, it gets harder for firms to differentiate themselves or outperform the competition, which can mean more emphasis on—and more investment in—the tools and information they use to make better trading decisions or to find new opportunities in which to invest,” he says.
by Vicki Chan
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Public Relations Information & Software Global
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Burton-Taylor delivers a comprehensive, 88 page analysis of public relations information & software supplier share, demand segmentation, vendor demographics and survey results of key user expectations. The analysis is sufficiently detailed as to allow public relations information & software providers or industry analysts to clearly understand competitive positioning currently, historically, globally, regionally and within individual demand segments and to enable public relations information & software users to make better informed, more confident and more appropriate purchase decisions which could result in greater profitability.
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