Singapore to let blank cheque companies raise funds starting on September 3, beating Hong Kong to the punch with SPACs
- Blank-cheque companies will be required to have a market cap of US$112 million, while sponsors will have to hold shares for longer
- Hong Kong’s stock exchange also considering rule changes to allow SPACs to list
The so-called blank-cheque companies have raised more than US$122 billion this year alone, primarily through listings in the United States. However, they have proven to be popular with Asian sponsors and target companies, prompting a race between Hong Kong and Singapore to see who would be the first to offer listings for these investment vehicles.
China to create megabrokerage by combining Guotai Junan and Haitong Securities
State-backed brokerages Guotai Junan and Haitong Securities are merging to create a firm with US$237 billion in assets to rival Wall Street
China will combine Guotai Junan Securities and Haitong Securities to create a megabrokerage with 1.68 trillion yuan in total assets (US$236.9 billion), part of a government-led push to make the nation’s financial services sector competitive with Wall Street.
Guotai Junan and Haitong are both owned by Shanghai’s state-owned asset administrator and the merger is pending approval from the companies’ boards and shareholders – as well as regulatory authorities – the statements said.
“It’s expected to be a milestone event for mergers and acquisitions between China’s top brokerage firms and will further speed up the industry consolidation,” said Zhang Jingwei, an analyst at SDIC Securities. “Against the backdrop of regulatory support, some medium-sized and big brokerages are keen to seek acquisitions to expand business scale, optimise the business structure and enhance long-term competitiveness.”
Shares of Guotai Junan and Haitong were both halted from trading on Friday in Shanghai and Hong Kong. The suspension is not expected to last more than 25 trading days, according to the statements. Guotai Junan rose 1.7 per cent to 34.70 yuan in Shanghai on Thursday, with the stock slipping 1.2 per cent this year. Haitong added 3.8 per cent to 8.77 yuan, paring its decline for the year to 6.4 per cent.
“The restructuring is conducive to building a first-class investment bank and promoting the high-quality development of the industry,” the statements said.
Guotai Junan and Haitong have combined net assets of 330 billion yuan, which would rank a merged company No 1 in the industry, according to Huachuang Securities. In terms of combined revenue and profits, the new entity would be placed second and third, respectively, the statements said.
“Haitong’s asset quality isn’t too healthy, given its poorly performing overseas investment banking operations,” said Xu Kang of Huachuang Securities. “The merger will certainly help to reduce risks in its international business.”
The merger has fuelled speculation about further consolidation among big players in the brokerage industry, sending some share prices soaring on Friday.
China Galaxy Securities jumped 4.9 per cent to 11.50 yuan in Shanghai and China International Capital Corp added 2.2 per cent to 28.50 yuan. Data provider Shanghai DZH’s in-house index tracking mainland-listed securities firms rose 0.8 per cent, compared with a 0.8 per cent decline in the Shanghai Composite Index.
China had 145 brokerages with 11.8 trillion yuan in assets at the end of last year, according to the Securities Association of China. Citic Securities is the biggest at US$39 billion in net assets, much smaller than Wall Street behemoths Goldman Sachs and Morgan Stanley with assets of US$119 billion and US$102 billion, respectively, according to Bloomberg data.
“A successful merger between Guotai Junan and Haitong will open the door for more industry consolidation,” said Xu at Huachuang Securities. “The alliance among top brokerages is a path that has to be followed to improve efficiency in China’s capital market.”
Hong Kong investors and listed companies wage a war of independence – over board directors
Independent non-executive directors are in focus after the stock market operator proposed a limit on the number of seats they can hold
On a Sunday night in June 2019, Abraham Razack faced a dilemma. The images he saw on TV news earlier that day unsettled him.
Razack, who is now 79, felt that the unprecedented demonstrative outpouring by the city’s residents was the beginning of something that “would not end any time soon, and it was set to hurt the economy”, he said last week in an interview with the Post.
Sure enough, that Sunday was the beginning of several months of protests – occasionally violent, some requiring police intervention – that kicked off Hong Kong’s descent into the economic doldrums. What followed was three years of the Covid-19 pandemic, which exacerbated the economic malaise. And Hong Kong has still yet to fully recover.
