Haitong sets up Singapore subsidiary

Haitong International Securities Group gains a securities and futures trading licence, as Chinese brokerages attempt to expand globally.

Haitong International Securities Group, the Hong Kong-based overseas business arm of Haitong Securities, one of China’s largest securities firms, has opened an office in Singapore, its first overseas subsidiary.

Although the move was flagged by the company late last year after it applied for an operating licence, the company has now received the licence and has announced more details on the scope of the business.

Haitong Singapore aims to provide unique access to Singapore, Hong Kong and China products for corporate and institutional investors based in Southeast Asia and the Middle East.

The company has stationed 10 people in the Singapore office - most of whom are in sales - and will hire more depending on the unit's development, said Patrick Poon, chief operations with Haitong International Securities Group.

Having gained a license in securities and futures trading and attracted many institutional investors to open accounts, Haitong Singapore will as a next step consider applying for licenses in financial advisory and asset management, said Poon.

The move into the Singapore market by Haitong Securities is another overseas expansion move from Chinese securities houses.

“Chinese securities houses are keen to get the last piece of the global market cake as big brokers have occupied the market,” said a senior executive with a Hong Kong unit of a Chinese bank. “Haitong International [Securities Group] has done very well and we will closely monitor how its expansion is going on.”

As latecomers to regional and global markets, Chinese securities firms have taken differing strategies in overseas expansion.

Last July, Citic Securities completed its acquisition of Hong Kong-based broker CLSA for $1.25 billion. China Minsheng Banking Corp took over Piper Jaffray’s Hong Kong business and is applying for an investment banking licence, according to two sources.

Haitong International Securities Group has set a target of winning absolute control of its targets in  Singapore, according to Poon. But it does not exclude the possibility of acquiring local companies through M&A. Poon also said that the group will consider Europe as a next step.

The Singapore move is also in line with a strategy change among  Chinese brokerages. Seeing a decrease in fees and commissions due to the weak secondary market, Chinese securities houses are trying to swing from fee-based to intermediary business to gain revenue balance.

As a financial hub with a diversified investor base and good liquidity in capital markets, Singapore will provide a launchpad for Haitong International Securities Group to further expand in Asia and enable overseas investors’ participation in China’s growth story, according to Lin Yong, deputy chairman and chief executive of the group.

Singapore is attempting to establish itself as an offshore renminbi hub, which offers Haitong an opportunity to better develop renminbi-denominated products. Haitong International Securities Group is keen to become the premium investment conduit for investors who seek access to the China growth story amid changing market dynamics, said Lin.

According to Singapore’s monetary authority, the total amount of renminbi deposits has grown 70% over a 10-month period to Rmb172 billion ($28 billion) as of October. Comparably, Hong Kong, the offshore market with the longest renminbi business history, has deposits of Rmb781.6 billion as of October.

¬ Haymarket Media Limited. All rights reserved.
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