China is ready to change its stock-market. Who is playing where? Here top 5 Chinese investment bank that already dominate Hong Kong board. US-based banks? At the bottom of the list
Investment banking in China become one of the best growing markets in the world. Both in volumes and fees, China has taken a dominant position, but foreign firms make their moves in China since last April’s announcement that foreigners would be allowed to take majority stakes in securities joint ventures on the mainland. China has already made its mark in debt capital market (DCM), equity capital market (ECM), and also in M&A (Mergers & Acquisitions).
During 2016, China accounted for 85.7% of DCM, 82.1% of ECM, and 52% of M&A in Asia in fees. If we joint all the markets, China has taken over 76.6% of the investment banking in Asia in terms of fees. Bul like stock – exchange, Chinese investment banking is a different beast, where state has stocks everywhere and competition among Chinese investment banks has become intense.
Experts even stated that China has too many Investment Bankers. Even China Securities Regulatory Commission underlined the problem: too much supply and not enough demand, with about 120 firms competing amid a plunging market and slowing economy. Rumors said that, maybe, Beijing is ready to reform in the next few year its investment bank environment, reducing to 20 big, full-service brokers, player in the sector. Smaller players need to find a niche market they specialize in and shift to boutique broker to continue their business. Today Chinese investment banks dominated Hong Kong listings market. Here PRC’s top 5 banks in finance and investment sector.
1. China International Capital Corporation Limited (CICC)
The China International Capital Corporation Limited (CICC – 中国国际金融股份有限公司) is the main China’s investment bank. Founded in 1995 and headquartered in Beijing, CICC has offices in Shanghai, Hong Kong, Singapore, London, and New York. On July 1995, CICC became the first Sino-foreign joint venture investment bank. At the time of CICC’s incorporation, China Construction Bank and Morgan Stanley were its largest shareholders, with a 42.5% and 35% interest, respectively.
In 1997, CICC established its first overseas subsidiary in Hong Kong, and in the same year completed its first overseas initial public offering project, the IPO of China Mobile on the Hong Kong Stock Exchange, which marked the beginning of the restructuring and overseas listing of large state-owned enterprises directly under the State Council of China. In 2010, CICC became the first investment bank to obtain approval from the China Securities Regulatory Commission to raise and manage private equity funds. Five years later, CICC completed its own IPO on the Hong Kong Stock Exchange.
2. Guotai Junan Securities (GTJA)
Guotai Junan Securities (GTJA) located in Shanghai and established on August 1999, after the merger of former Guotai Securities Co. Ltd. (founded on September 1992) and Junan Securities Co. Ltd. (founded on August 1992), is one of the largest investment banks and securities companies in China in terms of business coverage. It has set up 26 branches, 193 securities outlets in 30 provinces, municipalities and autonomous regions across China. agency distribution and customers server and, as many other competitor, is a partially state-owned enterprise.
From 2007 to 2015, GTJA has occupied the top three places in terms of operating revenue for seven years while during 2004–2011, the company has been top-ranked in World Brand Lab-China’s 500 Most Valuable Chinese Securities Brands. Between 2008–2012, it has obtained Class A AA-level according to the securities classification of the China Securities Regulatory Commission for five consecutive years.. GTJA has also been one of the Chinese financial industry’s leaders. Its achievements have included: the first to have been approved to conduct QFII business in 2003; to serve as primary dealer of the central bank open market, to become a market maker in interbank bond market; being amongst the first companies that received QDII qualifications and financial futures business qualifications in 2007; taking the lead in getting the qualification for equity investment and futures IB business in 2008; obtaining the margin trading & securities lending qualification in 2010.
3. CSC Financial
CSC Financial Co., Ltd. better known in stock-market as China Securities, is the second biggest Chinese investment bank and brokerage firm established by CITIC Securities and China Jianyin Investment in 2005 in a 60–40 ratio, as a successor of bankrupted China Securities Co., Ltd. (after several scandal which the staff illegally made investment without the consent of their client) . However, the firm now majority owned by Jianyin Investment’s parent company Central Huijin Investment and an asset managing subsidiary of Beijing Municipal People’s Government.
According to the company, China Securities was ranked 4th by underwriting 135 companies in National Equities Exchange and Quotations. In 2012, China Securities re-established its Hong Kong subsidiary as China Securities (International) Finance Holding, while in November 2016, China Securities started the global offering for its new H shares that would be floated on the Stock Exchange of Hong Kong. Today CSC Financial Ltd. engages in the full-service investment bank business. It operates through investment banking, wealth management and more. Plus the Investment Banking segment provides stock and bond underwriting and sponsorship services and financial advisory services.
4. CITIC Limited
CITIC Limited is one of China’s largest conglomerates and a constituent of the Hang Seng Index. In 2014 Fortune ranked the CITIC Group the 160th largest corporation in its “Top 500 Global Companies” and today, among company’s diverse global businesses, CITIC focus primarily on financial services, resources and energy, manufacturing, engineering contracting and real estate and 58% of its issued shares are owned by the Chinese state-owned CITIC Group. Nowadays the company is still growing, but in 2008 it faced several controversies. In October 2008, the Chairman Larry Yung disclosed that the firm lost US$2 billion due to “unauthorized trades”. As a result of the revelations, two officers were forced to resign and its shares was suspended on 20 October.
On January 2015, the Japanese general trading company Itochu and its Thai cross-shareholding affiliate Charoen Pokphand announced an investment of US$10.4 billion in CITIC Limited, the largest investment ever made by a Japanese general trading company. The transaction is also the largest acquisition in China by a Japanese company, and the largest investment by foreigners in a Chinese state-owned enterprise. On January 2017, the consortium of CITIC Limited, private equity funds of CITIC Capital and Carlyle, bought 80% stake of the franchise rights of McDonald’s in Hong Kong and mainland China, for a total consideration of up to US$2.08 billion.
5. Huatai (HTSC)
Huatai United Securities, is dedicated to providing professional investment bank service. Huatai, headquartered in Shenzhen with branches in Beijing, Shanghai and Nanjing, offers comprehensive financial services to institutional investors, including the government, enterprises, Mutual funds, insurance companies and more. Huatai is one of the first in the domestic securities industry focusing on providing comprehensive financial services to companies, government entities, and other institutional investors. Thus Huatai United Securities has been leading in the area of underwriting, recommendation, M&A and bond business. Actually the group clinched numerous awards and honors from leading industry organizations and media. In 2017, Huatai United Securities clinched awards including “M&A Achievement Gold Sail Award in 2017” and “Best Domestic Investment Bank” prices.
Hi-tech is part of the massive investment banking system of Huatai United Securities with the business coverage of TMT, high-end manufacture, energy and environmental protection and engineering construction. In 2016, Huatai United Securities helped listed enterprises in completion of financing for 29 projects, with accumulative total of financing RMB 2.428 billion, including such excellent projects as Joyu Culture, Jiuyan Technology, How Buy Wealth, Jiangsu New Energy and Dongnan Elevator.
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