Hong Kong's best securities house 2022
Haitong International Securities
Haitong International Securities ensured its Hong Kong franchise stayed strong during a period of upheaval: it showed it could change tack in line with market conditions and make prescient decisions, winning Asiamoney’s award for best securities house for Hong Kong in 2022.
Despite the tough market conditions caused by stock market volatility and a risk-off sentiment due to the financial woes at Chinese property developers, the firm led several deals in the past year, demonstrating the agility of its team.
Haitong International’s investment banking team navigated the adverse conditions by educating investors on key themes, choosing clients carefully and ensuring that all their regulatory work was completed upfront so that they could take advantage of issuance windows as they emerged.
The team also used its solid understanding of markets to offer issuers the right kind of advice. It certainly helps that Kenneth Ho, global head of equity capital markets, has been with Haitong International for a decade and has even longer experience in the industry, while Royston Quek has been in Haitong’s DCM team in Hong Kong for nearly four years and has about 15 years of banking experience.
Under their leadership, Haitong International worked on 30 Hong Kong IPOs in the 12 months up to early April 2022, and was involved in more than 250 G3 currency and renminbi bond deals for mainland Chinese and Hong Kong clients.
As for changing tack, the Haitong International team sharpened its focus on key sectors that it thought would offer the biggest opportunities, including artificial intelligence, technology, media and telecommunications, healthcare, real estate and property management.
Among the standout deals, it was a sponsor both for SenseTime Group’s HK$6.6 billion ($852 million) IPO in Hong Kong, the first AI company listing in Asia, and for the HK$4.8 billion listing of Medlive Technology, the largest online professional physician platform in China. It also worked on JD Logistics’ HK$28.3 billion debut on the bourse.
The firm has also looked for environmental, social and governance-focused deals. During Asiamoney’s awards period, Haitong International, whose parent is Hong Kong- and Shanghai-listed Haitong Securities Co, worked on about 40 green or sustainable bonds.
The third point to note is the team’s prescient decisions, especially given that China’s high-yield bond market has been almost shut since September. Haitong International made a decision early on to develop its business with local government financing vehicles (LGFVs) and state-owned enterprises, putting together a local SOE business team with nine staff members. This proved beneficial thanks to the spurt in deals from LGFVs in 2022 as they took advantage of a shift in investor focus to stable and government-backed credits.
Another move was to hone in on financial institutions, and help corporations looking for support with their liability management exercises when Hong Kong’s capital markets were roiled by political uncertainty. Haitong worked on 13 liability management deals during the awards period.
Despite all these wins, the firm had a choppy time. Overall revenues in 2021 fell 37% to HK$5.25 billion, while profit before tax slumped nearly 69% to HK$723 million, even though fee income hit a record of HK$3.3 billion. On the secondary front, Haitong International’s cash equities business had an aggregated trading volume of HK$640 billion in 2021, 23% higher than in 2020, driven by growth in Hong Kong.
Whether it will be able to continue its momentum in 2022 remains a question though, with deal flow across DCM and ECM tumbling in Hong Kong. Commission and fee income at the firm fell 58% in the first quarter to HK$380.6 million. But the team is hoping that their careful deal selection and focus on ESG and SOE issuers will help to tide the business over.