Haitong International, the Hong Kong arm of Haitong Securities, is one of the oldest brokers in China and also the first mainland brokerage house to buy a Hong Kong securities house. Chief executive Lin Yong talks about the firm’s global ambitions.
What does Haitong International aim to achieve?
We want to build Haitong International into an all-round world-class investment bank. Being a China-bred firm with a sophisticated base in Hong Kong gives us the advantages to bridge the onshore and offshore markets and facilitate investment in both directions.
We have done a lot to build up the business channels. When we first arrived in Hong Kong in 2007, we started with renminbi-related businesses and launched the first renminbi fund in Hong Kong in 2010. The fund currently has Rmb2 billion ($320 million) worth of assets under management. Meanwhile, we are building platforms in the first and secondary markets. There are still restrictions on capital controls in China; so we’re striving to build more channels to facilitate cross-border capital movement.
Chinese brokerage firms including Haitong have come a long way, what could be done to further accelerate their development?
The Chinese investment banks have made huge progress in recent years. Now all large Hong Kong IPOs have mainland brokerages involved and foreign banks are trimming their size in the region — they are facing competition from Chinese banks.
Haitong International has involved in many milestone deals such as the IPOs of Minsheng Bank, Goldwind and Pacific Insurance. We helped managed the recent Fosun Pharma IPO and brought in many mainland investors. So far this year, we have solely or jointly managed six companies’ share sales; we are looking to catch up with the global investment banks.
Haitong International may rank among the top 10 investment banks this year in terms of total fund raised, thanks to our participation in our parent company Haitong Securities’ H-share IPO.
Chinese brokers are merely an agent who charge a fee for executing buy and sell orders. Investors’ assets always remain in the bank. We need to have clients to entrust their assets to us, so we can better understand their investment needs and customise or enhance our services accordingly.
Now that many banks are cutting jobs, will you make the most of the opportunity and expand your team?
Some in the media think Chinese companies are taking advantage of their foreign counterparts’ job cutting, but that’s not the case. We invest large sums of money paying headhunters and settling compensations, so we can hire the best and brightest talents to build our team.
We have hired bankers from global banks. We now have 40 people in our investment banking team.
Haitong was confident it could grow organically when it first arrived in Hong Kong. What made you change your strategy?
We were confident at first then we saw how different the Hong Kong market was. Unlike on the mainland, where we can compete with only one product, it’s a more sophisticated market here.
Clients here are looking for a wider range of products and services, so we realise we must provide all-round service and product platforms in order to retain clients in Hong Kong.
It takes time and effort to establish and develop different business lines one by one, and we believe Hong Kong is an important market for us, so we decided to acquire a local broker. Taifook was a good choice — it had good transparency and good cash flow, and more importantly it had a good customer base.