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Daniel Ren

Haitong Securities yesterday became the second mainland brokerage to seek a listing in Hong Kong, joining its bigger rival Citic Securities  to raise the international profile of mainland securities firms.
The Shanghai-based brokerage said  it would sell up to 15 per cent of its enlarged capital, or 1.2 billion shares,  in a listing  to raise as much as HK$14 billion, based on its A-share price of 9.76 yuan (HK$11.62).
The H-share initial public offering plan comes a month after Citic,  the nation's largest brokerage, announced it would raise about US$2.7 billion in Hong Kong.
Mainland brokerages are eager to expand overseas as China's  financial clout grows and the country attempts to 'internationalise'  the yuan.
The two mainland brokerages raked in handsome profits in the past years,  largely because of high turnover on the  volatile stock markets.
Haitong  earned 3.7 billion yuan last year, although the profit was down 19 per cent from 2009. Net profit  in the first quarter rose 17 per cent from a year earlier to 1.19 billion yuan.  
'The Hong Kong listing plans are a clear signal that mainland brokerages want to expand abroad,' said Chen Xuebin,  a professor of finance at Fudan University. 'They will first hone their image as global competitors through a Hong Kong IPO and then use the proceeds to expand businesses.'
According to Bloomberg, Lin Yong,  the incoming chief executive of Haitong International Securities Group,  a Hong Kong subsidiary of the mainland brokerage, aims to lure  top investment bankers away from their US and European employers  by paying 'what's needed' to attract them.
Haitong bought Taifook Securities Group  for HK$1.82 billion in 2009 and created Haitong International.  
International  investment banks  played a leading role in managing the overseas public share offerings of mainland state-owned companies in the past two decades.
But the Chinese rivals are eyeing an increasing share of the lucrative business amid the country's high-profile 'go outbound' campaign.
On the mainland, the highly profitable secondary market business is still off-limits to foreign companies, which cannot  offer brokerage services and collect trading fees. Foreign investors are allowed only to form joint-venture investment banks with local partners to underwrite A-share offerings.
Protecting  local companies has helped home-grown players such as Citic and Haitong  make large profits which can be used for overseas expansion. But analysts  say it will take time  for mainland companies to gain the experience and acquire the talent to  compete with their foreign rivals.



Haitong seeks HK listing in overseas push