Coming in through the
Haitong Securities is one of China's oldest domestic brokerages,
with a history stretching back to 1988. In July 2007, it
became the first Chinese brokerage to enter the stock market under
the technique commonly referred to as a "backdoor listing."
Haitong was able to skirt Chinese government regulations by merging
with Shanghai Urban Agro-Business Co., Ltd., changing the name of
the company to Haitong Securities and launching its initial public
offering (IPO) on the Shanghai stock market. The backdoor
move was considered a necessary fundraising measure in order to
compete with international firms which are entering into the
securities business in China. Haitong was unable to comply
with the rule that firms have to have three consecutive years of
earnings in order to become public.
Haitong serves 2 million people on the Chinese mainland through its
124 domestic branches. The brokerage provides securities
underwriting, brokerage, trading, investment advisory, research,
and investment fund and asset management services to its
clients. It also provides an outlet for the sales and
purchase of securities, agency of debt service and dividend
distribution of securities, custody and authentication of
securities, agency of registration and accounts opening and
proprietary trading of securities.
In July 2007, Haitong got approval from the China Securities
Regulatory Commission to expand its company into Hong Kong, giving
the company new access to the international financial world.
The new company has been started with a capital of HK$100 million
and was named Haitong (Hong Kong) Financial Holdings. In
addition to the successful launch of its public stock, Haitong
Securities has posted some impressive numbers for 2007.
Year-ending numbers put the company's net profits at approximately
RMB 5.46 billion, an increase of almost RMB 4.8 billion from
2006. These numbers reflect an eightfold increase in profits
for Haitong and an incredible 32-fold profit for Shanghai
Urban-Agro Business, the company which Haitong acquired in order to
facilitate its public offering. In 2008, however, Haitongâ€™s
gross profits fell from RMB 10.5 billion to RMB 6.6 billion.
Private placement boosts
With Haitong's new IPO hot off the presses, the securities firm
decided it would hold an additional private stock placement in
November 2007 in order to raise even more funds to boost its
competitive edge. The brokerage sold off RMB 25.9 billion to
institutional investors for the purpose of "expanding the capital
pool and subsidizing operations." The institutional investors
were some of the Chinese financial world's biggest players,
including Pacific Investment Management, Huatai Asset Management,
Youngor Group, Taikang Asset Management, Jiangsu Guoxin Investment
Group, CITIC Group, Shanghai Electric Power Company and China Ping
An Trust & Investment.
The results so far have seemed to hint at a rosy future for Haitong
Securities. However, if the firm wants to stay competitive
with domestic competitors like chief rival CITIC Securities, it
must expand its business beyond the shores of mainland China.
The firm gained permission from the China Securities Regulatory
Commission to do just that in January 2008 when it was approved to
invest overseas on behalf of its clients under the rules of the
Qualified Domestic Institutional Investor scheme (QDII). In
August 2007, Fortis Haitong Investment Management was also granted
approval to launch products under QDII. Even though the
expansion marks the beginning of an important growth strategy for
Haitong, the firm is not alone among domestic competitors who have
also received QDII approval. Firms who have been approved
include China International Capital Corporation, CITIC Securities,
China Merchants Securities, Guotai Junan Securities, Orient
Securities, Everbright Securities and Huatai Securities.
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Haitong Securities Co., Ltd.
17-20/F Jiangzhong Plaza
No. 98 Huaihai Middle Road
Employer Type: Public
Stock Symbol: 600837
Stock Exchange: SSE
President: Mingshan Li
2008 Employees: 3,786