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Business / Markets

Broker stocks up on Shenzhen-HK link expectations

By Zhou Mo in Hong Kong (China Daily) Updated: 2016-08-12 07:43

Broker stocks up on Shenzhen-HK link expectations

An investor watches an electronic board showing stock information at a brokerage office in Beijing, March 30, 2016.[Photo/VCG]

Brokerage shares gained big in both mainland and Hong Kong stock markets on Thursday, amid growing expectations of the launch of the long-anticipated Shenzhen-Hong Kong Stock Connect program.

Guotai Junan International Holdings Ltd saw its stock surge 8.33 percent on the Hong Kong stock exchange on Thursday. Haitong International Securities Group Ltd jumped 7.85 percent, while CITIC Securities Co Ltd rose 4.23 percent.

The brokers also gained on the mainland side, with securities stocks gaining 0.57 percent on Thursday, despite average overall losses on both the Shanghai and Shenzhen bourses.

First Capital Securities Co jumped 5.31 percent on Thursday to close at 38.29 yuan ($5.78), Guoyuan Securities Co gained 2.83 percent to finish at 19.26 yuan and CITIC Securities rose 1.16 percent.

"Recent news about the launch of Shenzhen-Hong Kong Stock Connect is no doubt a big boon for brokers because they will be among the beneficiaries of the move, and this has pushed up brokers' share prices on both mainland and Hong Kong capital markets," said Zhu Bin, strategic analyst at the research and development center of Southwest Securities Co.

"But the gain will be short-term as the good news is only a policy catalyst for securities. For brokers, benefits brought by the new stock connect will be limited," Zhu said, adding that the Shanghai-Hong Kong Stock Connect, the first stock trading link between the mainland and Hong Kong, only contributed less than 5 percent to the growth of brokers' business.

Zhu expected that the stock connect between Shenzhen and Hong Kong would be launched in October or early November.

Hong Kong Exchanges and Clearing Ltd, the city's stock exchange operator, said on Thursday that it is waiting for approval from the regulators and does not have any information on when it will be launched.

Li Xiaojia, chief executive of HKEx, said on Wednesday the bourse is technically ready to implement the stock connect.

Last month, Hong Kong Securities Association Chairman Benny Mau was quoted by Hong Kong media as saying that there was big chance that the stock link between Shenzhen and Hong Kong could be announced in August. The stock connect could officially go into operation in October, the report said.

The Shanghai-Hong Kong Stock Connect was launched in November 2014. The program generated HK$71 million ($9.15 million) of income over the first half of 2016, down 38 percent compared with the same period a year earlier.

The Shanghai Composite Index dropped 0.53 percent to 3,002.64 on Thursday, while the Shenzhen Component Index fell 1.28 percent.??

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