CHINA'S first joint-venture stockbroking company has been formed by CITIC Holdings' Australian arm and leading brokers Hambros Australia in a bid to lure institutional investors to China's exchanges. The equal joint-venture company, CH China Securities, which will operate from Sydney and Melbourne, has been granted a licence for the Shenzhen Stock Exchange and has applied for a licence for Shanghai. CITIC Australia's managing director, Mr Zhang Jijing, said: ''Last year we found the B shares have attracted interest from Southeast Asian countries, Hongkong, Japan and North America, but not very much interest from Australia. ''We discussed what we can do to develop some business here because we believe the Chinese stock exchanges will provide great potential for overseas investors.'' Talks with the stock exchanges revealed that no Australian broker had shown interest in applying for a licence. So CITIC Australia approached Hambros, with which it has had a relationship since CITIC invested in Victoria's Portland aluminium smelter in 1986. Hambros and CITIC Australia representatives went to Shenzhen and Shanghai late last year to meet stock exchange officials, People's Bank officials and some of the major listed companies. Mr Zhang said that since those early plans were made two other Australian brokers - Potter Warburg and Bain and Co - had won Shenzhen Stock Exchange licences. But the joint venture would combine Hambros broking facilities with company and market information provided by CITIC staff in China assigned to the joint-venture company. Mr Alan Humphris, joint managing director of CH China Securities and director of Hambros Corporate Advisory, said the new company would have two CITIC analysts from Beijing to monitor the markets, keep in touch with CITIC's Chinese staff and the listedcompanies. There would also be a Sydney analyst and two dealers seconded from Hambros Equities, he added. He said: ''We hope to have access to good-quality information and do some comprehensive research. There seems to be a shortage of that. ''When we were there there did not seem to be much research carried out on individual stocks and that is probably why a number of investors to date have sought exposure through the funds. ''We have been quite surprised about the extent of knowledge and interest among Australian institutions. ''They probably have not got much exposure there at the present time but at least two or three have already visited China recently and held discussions with the stock exchanges.'' He said Hambros was ''in it for the long term'' and although the markets were young and emerging, eventually the venture could be very successful. ''We are going to take a conservative position in the markets. They are young markets and there is a settling-down phase'' he said. ''We are aware there has been concern about on-going disclosures and accounting standards and matters like that and hope they will be addressed by the new National Securities Commission and the companies and securities laws that are being drafted.'' Mr Zhang said CITIC would take a delegation of leading Australian institutional investors to visit the Chinese exchanges in early July. ''In our experience Australian investors are quite conservative and we think it is better for them to have first hand knowledge of both markets. ''I think they have an interest but I don't know how big. As long as they have shown an interest I think that is enough because this is a new, emerging market and there are still things to be fixed up. Once they understand they will feel more confident.'' Mr Humphris said the new company was still opening accounts with clearing banks and preparing research, but planned to be underway next month. He said as well as selling shares and corporate underwriting, to be considered in a case by case basis, Hambros and CITIC each saw spin-off benefits from the venture.
