HSBC China securities JV to quadruple research coverage

HONG KONG: HSBC plans to quadruple the number of mainland Chinese companies covered by research from its China joint venture over the next two years as it seeks to take advantage of its headstart as the first international bank to have majority control of its mainland securities firm.

Shenzhen-based HSBC Qianhai Securities, run in conjunction with a local government investment vehicle holding 49%, began operating a year ago offering equity and debt underwriting, research and broking as well as M&A advice and investment advisory work.

In addition to the 280 Chinese companies covered already by the bank, HSBC Qianhai has added more than 80 mainland-listed stocks since it opened, and plans to have expanded that to 400, according to Irene Ho, chief executive of HSBC Qianhai, in an interview with Reuters.

“We expect to get to 400 in two years there or there abouts,” Ho said.

HSBC is working to take advantage of what executives believe is a three-year headstart on international rivals because of its majority control, which it gained by virtue of rules favouring Hong Kong businesses.

Last Friday UBS became only the second bank to gain approval for 51% control under a broader relaxation of financial-sector ownership by Beijing.

The opening up of China’s financial sector promises huge opportunities for international players, until now mostly operating on the margins of mainland markets.

Analysts at UBS have forecast that foreign banks could quadruple their revenues from brokerage in China by 2025 if the trend of market opening continues. Last year, foreigners took 1.3% of the total fee pool, according to the UBS report, published in June.

Banks have been beefing up their research teams in recent years and market leaders such as Goldman Sachs, Citigroup , Morgan Stanley, UBS, and Credit Suisse, produce research on between 150 and 400 listed Chinese companies each. — Reuters