Bloomberg News

Haitong Leads Rally for Chinese Brokers on Cross-Border ETFs

October 12, 2011

(Adds analyst’s comment in third paragraph.)

Oct. 12 (Bloomberg) -- Haitong Securities Co. jumped by the maximum 10 percent in Shanghai, leading a rally for Chinese brokerages, after Xinhua News Agency reported the securities regulator approved cross-border exchange-traded funds.

Haitong Securities, the third-biggest brokerage by market value, surged 0.81 yuan to 8.87 yuan, the most since December 16, 2008. Citic Securities Co., the largest brokerage, gained 6.2 percent to 11.91 yuan. The China Securities Regulatory Commission signaled the go ahead for cross-border ETFs, Xinhua reported in a flash headline, citing an unidentified person. The report didn’t provide any more details.

“The introduction of cross-border ETFs will add a new profit engine for brokers for the long term,” said Li Jun, a strategist at Central China Securities Co. “It will help boost investors’ confidence in brokerage shares.”

ETFs mimic the performance of an index and trade like stocks. Chinese investors may benefit from the introduction of ETFs tracking overseas indexes as they currently have limited access to foreign stocks. China’s stock exchanges plan to more than double the number of ETFs they offer in 2011, aiming to spur investor interest in the world’s worst-performing major equities market last year, according to interviews with exchange officials in Shanghai and Shenzhen in March.

The benchmark Shanghai Composite Index advanced 71 points, or 3 percent, to 2,420 today, the most since Oct. 15, 2010. The gauge tracking financial companies including banks and brokers in the CSI 300 Index jumped 4.5 percent, the most among 10 industry groups.

A proposal to list Hong Kong ETFs on Chinese exchanges has been submitted to the China Securities Regulatory Commission, the China Securities Journal reported Sept. 8, citing an unidentified person at stock exchange.

--Irene Shen. Editors: Allen Wan, Richard Frost

To contact the reporter on this story: Irene Shen in Shanghai at ishen4@bloomberg.net

To contact the editor responsible for this story: Shiyin Chen at schen37@bloomberg.net


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