Shares of Bocom International, Haitong slump after Chinese securities firms warn of losses in 2022 forecasts

Name: China housing: Can the world’s biggest housing market boom again?
Uploaded: 2023-03-27T09:00:55.000Z
Duration: 11 min 5 s
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Drop in Bocom International stock came after Moody’s downgraded the firm late on Friday on concerns about its 2022 financial losses, risks in its investments and increasing leverage

Haitong International Securities also dropped in Hong Kong on Monday

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Pedestrians walk past a stock ticker outside Exchange Square, the building housing the stock exchange in Hong Kong. Declines in shares of Hong Kong-listed Chinese securities brokerages suggest concerns among traders about the firms’ gloomy revenue outlook. Photo: EPA-EFE

Iris Ouyang

Published: 5:00pm, 27 Mar 2023Updated: 12:10pm, 28 Mar 2023

The shares of Chinese securities firms have slumped in Hong Kong ahead of their earnings announcements for 2022 amid expectations of record losses following a slump in their incomes due to market volatility last year, as well as impairment losses generated by debt investments and loans to sectors such as property.

The shares of Hong Kong-listed Bocom International Holdings have slumped by 23.8 per cent so far in March, after declining 3.1 per cent on Monday, according to Bloomberg data.

Haitong International Securities also dropped in Hong Kong on Monday, taking its year-to-date decline to 25.3 per cent, while China Everbright slid 1 per cent year to date.

The declines suggest traders’ concerns about the gloomy revenue outlook for Chinese securities firms amid the recent market turmoil and risks arising from their investments.

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China housing: Can the world’s biggest housing market boom again?

Deterioration in brokerage and proprietary trading income and value depreciation in equity and bond holdings weighed on Chinese securities companies’ income in 2022, said analysts at Fitch Ratings. But Chinese securities firms’ Hong Kong-listed international branches are sufficiently backed by their parent firms, who will be able to avert any possible risks, as their average asset size was less than 1 per cent of that of the parent firm, as of the end of 2021, according to Franco Lam, director, nonbank financial institutions at Fitch.