SHANGHAI—Haitong Securities Co. became Tuesday the second mainland-listed Chinese brokerage in nearly two months to seek a stock listing in Hong Kong, as it seeks to expand its international presence and tap into Beijing’s long-term goal of globalizing the yuan.
Haitong Securities said it plans to sell up to 13% of its total share base after the issuance, with a greenshoe option to increase the offering size by no more than 15%. The company said it would use the funds raised by the listing to set up or purchase securities-related institutions overseas and increase its operating capital.
The Shanghai-based brokerage’s plan to sell shares on the Hong Kong Stock Exchange follows a similar announcement last month by its bigger rival CITIC Securities, which is negotiating a strategic tie-up with French bank Credit Agricole.
Listing in Hong Kong helps brokerages boost their presence in the city, where China is experimenting with a freely floating yuan and is mulling a proposal to allow the offshore currency to flow back into the mainland market via securities investments. Haitong Securities purchased a controlling stake in Hong Kong-based brokerage Taifook Securities Group Ltd. in 2009.
“Domestic companies’ H-share listing plans are likely to be aimed at internationalizing their businesses as it would increase their brand awareness in Hong Kong and overseas markets,” Shanghai Securities analyst Qian Weihai said.
Brokerages’ H-share listings may also help better position them for more yuan-related business.
The market has been expecting China to allow Hong Kong subsidiaries of domestic brokerages and fund managers to invest their offshore yuan-denominated funds in mainland China’s A-share and bond markets.
The program, which industry watchers have dubbed “mini QFII,” is based on China’s Qualified Foreign Institutional Investor program and will broaden the channels for offshore yuan deposits to flow back to the mainland’s capital markets, in line with Beijing’s long-term goal of globalizing the yuan.
“Securities firms’ H-share listing is mainly with a view to prepare for the wider using of the yuan as Hong Kong has a well developed and more open financial market,” said Guodu Securities analyst Zhang Xiang.
Allowing the yuan to be reinvested in the mainland capital markets would both boost the two-way flow of the currency and its attractiveness as a major reserve currency in the long run.
Under the QFII program, selected foreign investors can invest in the country’s financial markets within an approved quota.
Tuesday afternoon, Haitong’s A shares were down 3.7% at 9.81 yuan ($1.50).
–Amy Li contributed to this article.