China Merchants Securities (CMS) is a subsidiary of China Merchants
Bank (CMB), the sixth-largest bank in China. The securities
firm ranks ninth on the list of China's top brokerages. The
firm launched an initial public offering (IPO) in late 2008 after
the approval of the China Securities Regulatory Commission.
CMS hoped that the IPO would enable it to raise enough cash to
launch it even higher into the upper echelons of Chinese
In September 2007, CMS became the second securities firm in China
to have won the coveted status of qualified domestic institutional
investor or QDII after China International Capital Corporation
(CICC). The five other securities firms which have QDII
approval from the China Securities Regulatory Commission (CSRC) are
CITIC Securities, Guotai Junan Securities, Orient Securities,
Everbright Securities and Huatai Securities. The CSRC has
only allowed securities firms to invest in foreign securities
markets since April 2006 when the QDII program was launched.
At first, investments were limited to fixed-income and money market
products. However, the CSRC expanded the definition of QDII
in May 2007 to allow investment banks to invest in stock-related
products with modest restrictions.
Subsidiary of a
CMS handles its fund management through a joint venture with the
Dutch financial firm ING Investment Management. The firm is
called China Merchants Fund Management (CMF), and it was the first
Sino-foreign joint venture to receive formal approval to operate in
mainland China. CMF was founded in December 2002 as a
collaboration between CMS, ING and three other companies: China
Power Finance Company, China Huaneng Finance Company and China
COSCO Finance Company. However, in May 2007, China Merchants
Bank bought out the three companies, leaving CMF evenly split three
ways between CMB, CMS and ING.
Also headquartered in Shenzhen, most of CMF's business revolves
around the launching of funds and fund management. The firm
is organized into nine main departments: investment management,
investment trading, marketing, client services, IT, business
development, supervisory and audit, general management and finance,
and fund accounting. In January 2008, CMF was also granted
QDII approval by the CSRC.
Prior to the public debut of CMS, in December 2007, the firm
received a purchase offer for 29.77 million shares from a domestic
airline company, Hainan Airlines. Hainan offered to buy the
shares, representing an approximate 1 percent stake in CMS at RMB
20 per share for a grand total of RMB 595 million. However,
the purchase price is subject to adjustment if the IPO price comes
significantly higher than Hainan Airlines' offer price.
Hainan Airlines will raise assets for the buy from its parent
company, Grand China Airlines, the fourth largest airline in
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China Merchants Securities Co., Ltd.
Block A, 38th Floor Yitian Road
Employer Type: Public
Chairman (China Merchants Bank): Qin Xiao