Haitong International is striving to start a brokerage in Singapore before the end of this year after receiving an operational licence and is scanning the market for acquisition opportunities.
Lin Yong, chief executive and deputy chairman of Haitong International, the Hong Kong division of China’s second largest securities firm, tells AsianInvestor that joint-ventures are not in the pipeline, noting that it wants full control of the business. “We will either acquire the whole business, or build it up ourselves,” he states.
Acquisition is a route it took in Hong Kong in 2009 after paying HK$1.8 billion ($232.1 million) for a 52.86% stake of Hong Kong-listed Tai Fook Securities, which later became Haitong International.
Lin notes that no solid M&A opportunities have arisen as yet, but stresses it is not for want of looking. He adds that acquisition targets it would consider would need significant AUM.
Haitong International has already rented office space in Singapore and staffed it, says Lin. Over the longer term, he says it will seek to provide all the services in the Lion City that it currently offers out of its Hong Kong office, namely brokerage, asset management, wealth management and investment banking. It also aims to bring its RMB-denominated prodcuts to Singapore.
At present Haitong International is applying for a licence from the Monetary Authority of Singapore to deal in securities and futures.Thereafter it will apply to be a member of the Singapore Exchange (SGX). Right now BOC International, a subsidiary of the Bank of China, is the only Chinese firm allowed to deal in securities in Singapore.
Once it opens a brokerage business in Singapore, Haitong International will introduce its asset management offering and bring its array of RMB-denominated products to the local investment community.
Haitong has two RMB-denominated funds – the Haitong China RMB Income Fund and a dim-sum bond fund Haitong Global RMB Fixed Income Fund – and more products are in the pipeline.
This year Haitong International received three batches of quota from China’s State Administration of Foreign Exchange (Safe), bringing its total renminbi qualified foreign institutional investor (RQFII) quota to Rmb4.9 billion since the programme launched in 2011.
Sources say the firm is also in the process of developing an exchange-traded fund to track the CSI 300 with some of this quota.
Eventually, the firm may consider offering RQFII ETFs in Singapore, Lin notes, a move that was only recently allowed after Chinese authorities announced in the middle of July they would extend the RQFII programme to Singapore and London.
Haitong also has a qualified foreign institutional investor licence, and is the first firm to take part in the RMB-qualified foreign limited partner (RQFLP) business, which allows qualified foreign fund managers to raise RMB from offshore investors and then invest that money back into RMB private equity funds based in Shanghai.