Citic Securities among five of China’s top brokerages under probe amid stock market slump
Haitong, GF, Huatai, Founder and Citic Securities all face mainland regulator’s wrath as Beijing intensifies crackdown amid market slump
Four of China's brokerages last night announced they were being probed by the regulators for suspected failure to review and verify clients’ identities, while state media reported that Citic Securities was also under regulatory cross hairs.
The latest crackdown came amid renewed efforts by Chinese authorities to stem a free fall in stocks, which have lost 22 per cent in the past four days.
Haitong Securities, GF Securities, Huatai Securities and Founder Securities all announced through stock exchange statements that they had received notices from the China Securities Regulatory Commission about the probe and that they would cooperate with the industry watchdog and fulfil all due information disclosure obligations.
Separately, Xinhua reported late last night that eight people from Citic Securities were being investigated for possible involvement in illegal securities trade.
A staff member surnamed Wang from Caijing magazine was also being probed for spreading rumours.
A current and a former staff member at the CSRC were also being investigated for suspected insider trading, it said.
The latest crackdown is a throwback to the flurry of punishments meted out to major securities firms, including Haitong, Huatai and Citic, by the regulator earlier this year for violating margin trading rules. The only difference is that the authorities were trying to cool down a runaway stock market boom back then.
“The business of the company is under normal operations,” Haitong Securities said, without elaborating.
Earlier in the day, Haitong’s offshore arm – Haitong International – said it expected slower revenue growth as it announced a 248 per cent year-on-year rise in interim revenue to HK$4.1 billion.
Buoyed by high turnover in the mainland and Hong Kong stock markets in the first half, all growth numbers at the Hong Kong-based brokerage chalked up explosive two to three-digit increases.
The company has grabbed about 20 per cent of the market share in the exchange-traded fund market-making business in Hong Kong.
Since its March takeover of JapanInvest, a boutique investment bank, the brokerage’s equity research coverage has spanned across five markets, including Singapore, New York, London and Tokyo.
Haitong is applying for the mutual recognition status for its Hong Kong dim sum bond fund.
Huatai Securities, China's largest brokerage by trading volume, raised US$4.5 billion in Hong Kong in May in what was the city’s biggest initial public offering this year.
