Sun Hung Kai & Co, the financial services group where Allied Properties recently bought 33.18 per cent, yesterday confirmed it was in talks to sell part of its operations to the Hong Kong arm of one of China's biggest brokers. Responding to weekend reports that a $400 million deal had already been signed, it said that an agreement to offload certain financial services-related assets to Shanghai International (HK) had not yet been reached. 'There has been significant progress in the discussion with Shanghai International (HK) and a further announcement will be made when appropriate,' the company said. 'The company is in discussion with various independent third parties on various proposals in relation to its financial services.' Sun Hung Kai & Co's announcement yesterday followed reports that the group had struck a deal with Shanghai International last Friday to sell 60 per cent of its brokerage arm, Sun Hung Kai Securities, for $400 million. Shanghai International, which is listed on the Hong Kong exchange, said earlier this month it was in talks to buy a stake in Sun Hung Kai Securities. The company is part of Shanghai International Securities Co, the broker which merged in April with Shanghai Shenyin Securities and was launched earlier this month to form China's biggest broker. Shanghai International (HK) is involved in loan-financing, share-dealing and other financial services. In December 1994, the group activated its seat on the Hong Kong Futures Exchange and started dealing in index futures and options. The group also provides share custodian and nominee services through subsidiary Shanghai International Nominees (HK). The group reported a 13 per cent fall in profit to $8.79 million for the six months to last December. Ever since Allied Properties, part of Allied Group, announced plans in May to spend $743.6 million on most of the stake in Sun Hung Kai & Co held by the Fung family, speculation has centred on a possible sale of the broking arm or other parts of the business. Rumours initially suggested parties including Henderson Land Development chairman Lee Shau-kee and the Kwok brothers' listed vehicle, Sun Hung Kai Properties, may have been interested.