Haitong Securities setting up HK unit in expansion move overseas

Haitong Securities, the sixth biggest mainland brokerage by assets, has gained regulatory approval to set up a financial holding unit in Hong Kong in its first move to expand overseas.

The Shanghai brokerage would complete registration of its wholly owned Hong Kong unit within a year after gaining approval from the China Securities Regulatory Commission, the firm said at the weekend.

The new subsidiary, Haitong (Hong Kong) Financial Holdings, would have a registered capital of 100 million yuan.

Major mainland brokerages including Citic Securities, Guotai Junan Securities and China Merchants Securities have similar subsidiaries in Hong Kong as their first step in expanding abroad.

Their Hong Kong units could ease increasing demand from mainland retail investors for H shares traded in the city, which would in turn help boost their fee income as foreign ventures entering the mainland market intensify competition.

The number of new accounts opened by mainland investors at China-backed brokerages in Hong Kong rose 80 per cent in the first half this year, market observers have said.

Brokerages are also tapping the local stock market for funds for their expansions. Haitong in June completed the injection of its assets into Shanghai Urban Agro-Business for a back-door listing.

Shanghai's Orient Securities and Everbright Securities, the country's 10th and 13th biggest brokers by assets, announced separately in a newspaper on Saturday they were preparing their A-share listings.

Orient Securities, 28 per cent owned by Shanghai Shenergy Group, reported operating revenue of more than 800 million yuan in the first quarter this year and more than 500 million yuan in profit, the Oriental Morning Post said.

Everbright Securities' pre-tax profit soared almost 900 per cent in the first half, the China Securities Journal reported last week, citing the firm's unaudited interim report.

Last month, China Merchants Securities issued similar announcements on the progress of its initial public offering, while Guotai Junan Securities had hired an auditor in April for its Shanghai listing. Only three mainland brokerages, Citic Securities, Hongyuan Securities and Haitong Securities, are publicly traded in the domestic market.

Northeast Securities and GF Securities are still waiting for approvals from the CSRC for their backdoor listing plans.

Other brokerages preparing an A-share listing are Guosen Securities, China Galaxy Securities, Huatai Securities, Tebon Securities, Industrial Securities and Founders Securities.