A broker’s world through his crystal ball

Securities house executive Yim Fung’s undeterred confidence in the industry pays off with mainland brokerages in HK now finding themselves on a firm track. He talks to

Large mainland brokerages have been stepping up their internationalization drive in the capital market through listings or mergers and acquisitions, especially in the past two to three years.”

Yim Fung had sanguinely defied the odds when he placed his faith in Hong Kong’s securities business 18 years ago — on the heels of a devastating global financial crunch.

Local brokerages had not been spared from the turmoil that gripped almost ever y aspect of Asian financial life, with Hong Kong witnessing one of the most spectacular business breakdowns — the demise of the city’s largest broker Peregrine Investment Holdings Ltd in early 1998.

Yim’s bet paid off. The chairman and chief executive officer of Hong Kong-based Guotai Junan International Holdings Ltd — the overseas arm of the Chinese mainland’s third-largest brokerage by assets Guotai Junan Securities — soon found he had hit pay dirt.

When he began his stint with the group’s Hong Kong unit in 1999 — just two years after the handover — the local retail brokerage trade was still very much in the clutch of the city’s securities houses, and investment banking was largely done by foreign banks. Mainland-owned brokerages in Hong Kong were very much a rare commodity, Yim recalls.

Peregrine’s collapse offered a grim reminder of, perhaps, what was to follow.

But, by 2006, the China Securities Regulatory Commission (CSRC) — the mainland’s securities watchdog — had started encouraging financial enterprises to innovate and prodding them into “going global”. Mainland-owned brokers thus embarked on their march onto the global financial stage.

Guoyuan Securities became the first mainland brokerage to get the CSRC’s nod to set up shop in Hong Kong in mid2006. It triggered the rush, with the number of mainland brokers surpassing that of their local and foreign peers in Hong Kong in recent years, according to Yim.

By late last year, the operations of mainland securities houses in the SAR had recorded just a 21-percent year-on-year