Huatai International has climbed the ranks to become not only one of the local leaders in Hong Kong’s investment banking market but also a force within the Greater Bay Area.
The group wins Asiamoney’s award for the most innovative investment bank in the GBA in 2023 thanks to its growth, prowess and ability to think outside the box.
Despite a slump in investment banking deal flow in 2023, Huatai’s revenue rose 14% to HK$10.9 billion ($1.4 billion) year on year, while profit jumped 34% to HK$2 billion.
It captured a decent share of IPOs and follow-on offerings, and helped issuers to navigate unfavourable market conditions by advising them to reduce the size and valuation of their initial public offerings, and then do follow-on equity raisings once conditions stabilized.
A strong risk profile within fixed income has helped Huatai to mitigate losses arising from turmoil in the high-yield and Chinese real-estate debt market in the past couple of years.
A clear winning factor was Huatai’s willingness to fill some of the gaps in the GBA’s financial markets. For example, when banks within the GBA retreated from real assets businesses such as aviation or shipping, Huatai stepped in to offer funding. It was able to use its strong franchise in Hong Kong – as well its onshore network through parent Huatai Securities – to stay close to GBA clients during this period of turmoil.
In wealth management, Huatai has an innovative, one-stop digital platform called Zhangle Global, which has a comprehensive spectrum of functions and services. These include: fast trading experiences across Hong Kong, the US, Singapore and onshore China; instant market data; funds; robo-advisory; and real-time market news. By the end of March, Zhangle had more than a million clients and more than two million downloads.
One reason for Zhangle’s success is Huatai’s ability to provide daily liquidity to its clients, if needed, through investments into money-market funds.
Another innovation was Huatai’s decision to offer clients a way to short sell and execute swaps during periods of volatility. These hedging options were in strong demand, particularly from wealthy clients.
A notable example of out-of-the-box thinking was Huatai’s collaboration with smaller brokerage houses. Huatai has two schemes: one is a collaboration for client introduction, whereby the rivals offload their clients to Huatai; the other is an omnibus solution, where rivals’ clients can access Huatai’s stronger platforms and product suite. The idea is that working within the GBA is not a zero-sum game and that more collaboration is better for brokers.
A final advantage is the Huatai International GBA fund, which was set up in 2019 and now has assets under management of about $1.1 billion. The focus is on structured credit, event-driven opportunities, asset and project financing, and special situations within the GBA – all of which are likely to tick up this year.