CLSA and the state of independence
Will brokerage CLSA be able to maintain its famed independence when it is bought by Citic Securities, asks Peter Guy
Hong Kong's stock market investors know CLSA. The brokerage's distinctive yellow and blue reports are colourful and clearly written. While the firm only deals with institutions, everyone active in this market has at some point placed their hands on the brokerage's ubiquitous research, which frequently moves the market in Hong Kong and the region.
International acquisitions by mainland firms are almost commonplace these days, but Citic Securities' recent announcement of its US$1.25 billion purchase of CLSA drew considerable attention.
As one of the last of the big, independently managed Hong Kong stock brokerages, CLSA has enjoyed an enormous degree of local autonomy through the years.
Its first majority shareholder, Credit Lyonnais, owned 65 per cent, so local management held an unusually large 35 per cent stake.
The set-up gave CLSA a strong local voice. The management was responsive to conditions on the ground in Asia. They were not waiting for directions from Paris, New York or London.
While CLSA operates a sideline in investment banking, the brokerage is the bigger part of the beast. This means the brokerage does not have to mince words to keep corporate clients of the investment bank happy. Its research is more independent than other houses.