Across The Border | China’s mid-sized brokerages seen buying Hong Kong rivals
Facing competition and consolidation in China, the country’s medium-sized brokerages are eyeing rivals in Hong Kong as they seek to expand
Hong Kong will see more brokerage houses acquired by mainland rivals, as these mid-sized securities firms expand overseas business amid severe consolidation in their home market.
Shanghai-listed Soochow Securities entered into a memorandum of understanding with Hong Kong-listed Skyway Securities Group, to acquire at least 51 per cent of Skyway by subscribing to new shares, according to a Skyway statement filed with the Hong Kong bourse on July 29.
Medium-sized brokerages rarely venture overseas to buy Hong Kong firms, though bigger firms made the jump years ago.
Soochow ranked at 21 among 125 mainland securities firms last year, with 70 billion yuan in total assets, according to data from the Securities Association of China. Companies in the top 10 generally had assets of more than 200 billion yuan.
Kenny Wen, Hong Kong-based wealth management strategist at Sun Hung Kai Financial, said more such deals will occur in the city.
“There are at least two mainland companies on the way to starting brokerage businesses in Hong Kong. It has become a trend,” Wen said.
