Haitong Securities: The catch-all
Haitong's ambition and aggression has helped shape Asia's financial system, and made it a mainstay of Hong Kong's capital markets.
Under Lin Yong’s leadership, Haitong International has become a mainstay of Hong Kong’s capital markets
Chinese securities houses have changed the landscape of Asia’s capital markets with their ambition and aggression, but the market has a love-hate relationship with them. And there is one name at the centre of that: Haitong Securities.
Haitong Securities is a brand that has stood the test of time: it is the only large Chinese securities company that has not been renamed since its establishment just one year before Asiamoney in 1988.
There’s a certain irony to that. It has been one of the biggest drivers of change in Asia’s capital markets, leading the way among a large crop of aggressive securities houses that both anger and awe rivals in equal measure.
In just 10 years, Haitong Securities has transformed its international investment banking arm, Haitong International, into a distinctive Chinese house in the offshore market. It has become so iconic that some rivals use “the Haitongs” as a catch-all term for the whole group of Chinese brokerages that have set up in Hong Kong.
Haitong International is clearly ambitious, under the leadership of Lin Yong. While many of its Chinese peers have only set up their Hong Kong-based businesses in the last couple of years, Haitong already operates seamlessly across corporate finance, wealth management, asset management, institutional client services (including fixed income, currency and commodities, derivatives and institutional equities services) and investment banking.
It has made its name in both equities and debt capital markets, featuring in the hottest listings in Hong Kong as well as a considerable amount of dollar bonds from Chinese issuers.
It has climbed to the top of league tables in Asia ex-Japan with an investment banking share of wallet that put it in fifth place in 2017 and eighth last year, according to Dealogic.
Haitong expanded into India in 2016, via the acquisition of Banco Espírito Santo de Investimento. It also completed its first IPOs in Singapore and the US for Chinese clients last year.
Everyone agrees that Haitong's international business has come a long way. But not everyone agrees with how it managed to get there. The word frequently used to describe its approach to business is “aggressive”.
The subtext is usually that the firm is too aggressive – and too willing to challenge the market conventions that have helped create some sense of order in Asia’s capital markets.
The very mention of the firm is likely to cause strong reactions, sometimes critical.
Everyone agrees that Haitong's international business has come a long way. But not everyone agrees with how it managed to get there. The word frequently used to describe its approach to business is “aggressive”
While bankers at the firm stress its full coverage, others still see it as a niche player. Employees put the emphasis on doing market-driven deals and distribution ability, whereas rivals notice many off-market or loan-style transactions.
While its competitors say the likes of Haitong International have blurred the line between syndication and investment desks, bankers at the firm argue that they “very rarely” take bonds on balance sheet.
Some rivals are more generous, arguing that Haitong is the only international securities house that really matters in the offshore debt market.
“I see them as my only competitor,” says a senior Chinese DCM rival. “They are controversial because of their appetite for risk, but they have the people and the experience – and some capital – to do this. It isn’t about right or wrong; it’s just different. Others don’t necessarily go that extra mile for their clients.”
But whether you are an angry rival or a firm supporter, there is no arguing with the numbers.
In 2018, the firm broke the record for Hong Kong IPOs as a bookrunner with 37 deals. In DCM, it has a small team of 11 that was involved in about 170 deals – a more than impressive volume per head.
A people business
One can argue that Haitong International’s style is partly defined by its Shanghai-based parent, which is seen as one of the more market-oriented houses, arguably due to its relatively low state ownership.
But more importantly, the senior bankers at Haitong International, mostly ex-bulge bracket players, understand that the investment banking business is a people business at the end of day. One of them recently said jokingly to Asiamoney: “I have the job of a second-hand car salesman.”
They understand that this business is about “getting the deals done” in both good and bad markets, as a second Haitong banker put it. This was particularly true for the Puxin, Weimob and Luckin Coffee IPOs last year, all launched in volatile markets.
They also understand that in the competitive Hong Kong markets, where both international banks and newcomers from China are fighting for a piece of the pie, they have to find a way to stand out.
There is no middle ground when it comes to a unique yet influential firm like Haitong's international arm. Some love it, others hate it. But none deny its success.
Note: this article was updated on September 27 to make clear that Lin Yong is the CEO of Haitong International, not Haitong Securities.