Date
25 September 2017
The second market drill of the “through-train” program will take place on September 13 and 14 after the first trial ended last week. Photo: Bloomberg
The second market drill of the “through-train” program will take place on September 13 and 14 after the first trial ended last week. Photo: Bloomberg

Brokers, banks gear up for Stock Connect scheme

With the Shanghai-Hong Kong Stock Connect set to be launched in about a month, securities firms and banks are raising funds and offering low commission fees to pull in investors.

Bright Smart Securities and Commodities Group Ltd (01428.HK) plans to raise more than HK$550 million (US$70.96 million) through a rights issue, by issuing one rights share for every two existing shares at HK$1 per share, Metro Daily reported Monday.

The money raised will mainly be used for the margin business as the demand for margins is expected to go up after the launch of the “through-train” scheme that connects the Hong Kong and Shanghai stock markets, said Nelson Chan Kai-fung, chief executive of Bright Smart Securities.

The firm has introduced preferential packages with exempted commission fees and stock custody fees, and low-interest margins.

Guotai Junan Securities Co Ltd said last month it plans to raise more than HK$2 billion through a rights issue, by issuing one rights share for every existing five shares at HK$5.30 per share, to beef up its financial condition.

Banks are competing against brokerage firms with commission rebates.

The maximum amount of commission rebates for Bank of China (Hong Kong), HSBC and Dah Sing Bank are HK$6,000, HK$5,000 and HK$2,500 respectively.

Some small brokers said they felt helpless about what banks and large securities firms are able to do.

Hung Sing Securities director Cheung Yik-cho said they can only rely on improvements in their service quality to retain their long-time clients.

While some large firms deploy a predatory pricing strategy, the smaller firms can only afford to provide part of such preferential packages, and see “who can survive till the end”, he said.

The second market drill of the “through-train” program will take place on September 13 and 14 after the first trial ended last week.

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JH/JP/JL

EJ Insight reporter

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