It's an enterprise known across the border for building properties and highways, so why is Yue Xiu Group now willing to splash out billions of dollars to buy a Hong Kong bank? Your columnist has been puzzled by this ever since the Guangzhou-based group's pursuit of Chong Hing Bank was leaked.
In the coming days you, will hear some formal explanations from the company for its move, but these are likely to only partly answer this question. More telling, though, is a photo taken last year. In the picture is Vice-Premier Wang Yang, the then Communist Party secretary of Guangdong. He was visiting Yue Xiu's booth in the province's first financial trade fair. Bear in mind that Yue Xiu belongs to the Guangzhou municipal government; Wang's visit was special and its significance grows in the light of the past week's developments.
Wang's successor Hu Chunhua followed suit with a visit to the Yue Xiu booth at this year's event in June.
Then, in August, deputy provincial head Chen Yunxian visited the company's headquarters, saying: "The provincial government will continue to support Yue Xiu Group to grow big and strong. That is in line with our strategy to make the province a strong 'financial province'.
"The country's financial reform is moving towards the deep water … the Yue Xiu Group should grasp this historical opportunity, consolidate your resources, and strive for performance in the Guangdong-Hong Kong-Macau cooperation."
Clearly the province, facing a slowdown in its trade-driven growth, is pinning its hopes on Yue Xiu to make its financial dreams come true.
For Guangdong's broader ambitions, Chong Hing is the missing piece in a big puzzle.
Established in 1985, Yue Xiu grew its assets from HK$40 million to HK$170 billion largely by building houses, shopping malls and highways.
It did not start its financial business until last year, when Guangdong pledged to make financial industry its new growth engine in its 12th five-year plan. Largely through acquisitions, Yue Xiu has since moved into securities, futures, asset management, loan guarantees and the micro-loan business.
Its senior managers have told the media that it has been looking for a bank to provide these businesses with an anchor for expansion. Just think about how its securities business can grow with the backing of a bank's book.
In fact, Chong Hing would provide Yue Xiu with more than an anchor, despite a market share of only 1 per cent in Hong Kong. Among the top benefits is the regulatory convenience. On the mainland, banks are not allowed to own securities, insurance and other financial business unless they secure special approval. The purchase of Chong Hing, an offshore bank, would skirt this restriction.
Then, there is the domestic network. With Chong Hing having only one branch in Shantou and two representative offices in Guangzhou and Shanghai, it does not seem to have much to offer.
But the Closer Economic Partnership Arrangement puts a Hong Kong bank in the fast lane for opening branches in Guangdong. For Yue Xiu, such a route to fast local expansion is good enough. Sure, there will be limitations on its business up north in the short run. Yet, once Chong Hing becomes incorporated on the mainland, it will be a different ball game.
Finally, there is the overseas network. Yue Xiu has raised more than 20 billion yuan through Hong Kong bank loans as well as from the equity market. It has funded its investments with this cheap money through various bank arrangements and halved its financing costs. Yue Xiu should have a good idea of the demand for these funds and therefore the value of a foreign bank with a local arm. Besides, a marriage with Chong Hing will provide it with immediate access to Chong Hing's securities, futures and asset management business in Hong Kong - all in one go.
In China's business world nowadays, what matters is whether you can help business clients with their overseas dealings. That is particularly true for Guangdong's export-oriented economy. Chong Hing's franchise is tiny but it still ticks a box in this vital area.
For the provincial government, the first Guangdong-based financial conglomerate will provide a big boost to its ambitions. It now has only five brokerage firms, three fund houses and 11 futures traders. Guangdong is losing out to provinces in the Yangtze River Delta in that respect.
And it's not just about face. The provincial government has cited growth of international finance - in particular the cross-border yuan business - as one of the core drivers of its financial engine. Some officials believe Chong Hing will provide a big push in that direction.
So there are indeed plenty of reasons for Yue Xiu's - or should we say Guangdong's - pursuit of Chong Hing. The question is whether the grand plan can be turned into reality. With only a year's track record in the financial industry and a management short on financial expertise, Yue Xiu will be on a steep learning curve.