Chinese brokerage Orient Securities Co is aiming at a Hong Kong listing next Monday and plans to raise close to $148 million (HK$1.15 billion). The offering is the first this year after the market was shattered in the beginning of January amid uncertainty over the state of the Chinese economy.
With credit risks rising, the flow of companies in the region that are listing in 2016 has materially declined after the stock market slump at the beginning of the year. With the stock market decline fueled by the trimming of positions on the part of stock brokers which raised the mind blowing $22.4 billion last year, the growth foundations for the stock broking industry in China are looking unstable.
The majority of the companies that got listed last year have been outlining the key growth areas in margin finance and lending for stock purchases.
With the market slump and the trading restrictions which Chinese regulators have imposed on the stock market, the attractiveness of trading local shares has materially declined and with capital controls in place local investors are struggling to find alternatives.
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With the regulatory crackdown of Chinese regulators on margin financing products, Orient Securities has outlined that it is only going to “selectively” develop this aspect of its business.
The company has singled a joint venture with Citigroup Inc to in China, an approach which is widely favored by a number of companies in the trading industry.
While Western companies are excelling in the technology aspect, local firms possess the knowhow to attract local clients to the offerings on the market.
According to Reuters, a number of other Chinese brokerage companies are aiming to raise funds in Hong Kong this year. Everbright Securities Co Ltd, China Merchants Securities Co Ltd and China Securities Co Ltd (CSC) have been outlined to be aiming for $4 billion.
The underwriters of the offering are Citigroup, Goldman Sachs and Nomura.