Hong Kong is Asia’s busiest IPO market and a hub for offshore bond issuance. With the amount of business that flows into the city from the mainland, the international arms of Chinese banks and securities firms have become leaders in the local market.
China has hundreds of financial institutions; as a result Hong Kong has become flooded with their subsidiaries, big and small. Distinguishing the top players from the minnows, however, is not hard.
Haitong International Securities is one of those players, and under chief executive Lin Yong’s guidance it is in fact at the top. Its dominance in various markets gives it a much-desired position among its mainland peers.
Haitong is a leading broker in trading on the Shanghai and Shenzhen Stock Connect system and is strong in the primary equity capital markets. It provides customers with broking and dealing services for securities, futures and options contracts.
China’s big four and a handful of other large banks have beaten Haitong when it comes to market share based on value over the last 12 months, with Haitong ranking 15th in Dealogic’s top 20 league table. But the securities house leads when it comes to the number of deals. By facilitating transactions including the smaller listings that don’t make headlines, Haitong shows its reach and ability to provide real IPO advisory and underwriting services. The international arms of China’s banks get league table credit typically by winning junior syndicate roles on a few big deals – bulge-bracket banks are still the dominant force among large Hong Kong listings.
Strip the big deals out of the mix and the picture changes drastically. In the first half of 2019 there has been a lack of sizeable listings in Hong Kong: Haitong was ranked second by Dealogic with 34 deals worth $6.3 billion in total. Its closest competitor, Guotai Junan Securities, was ranked 10th with just 15 deals valued at a combined $3.9 billion.
Haitong is a feisty securities house holding its own among international firms, bulge brackets and China’s largest banks. To top it all off, the firm has regained some success in the dollar bond business. Over the last year it managed 156 deals worth about $7.7 billion, putting it in eighth place in Dealogic’s bookrunner league table. During the previous year, it ranked 16th, handling 103 deals worth $6.1 billion in total.
Hong Kong’s capital markets are still led by global names, but mainland firms are creeping up the league tables. Haitong is leading the way, not only as a disruptor, but as a facilitator of the flood of Chinese business into Hong Kong.