China News: Tai Fook eyes futures brokerage tie
Tai Fook Securities Group Ltd. (HK: 0665) expects to clinch a futures brokerage deal on the mainland this year, according to the head of the retail-focused Hong Kong brokerage firm.
“We’re in talks with about three to four Chinese candidates for a joint venture brokerage, and we should be able to set it up sometime this year,” said Peter Wong, Tai Fook Group’s managing director.
“What we want, though, is a 49 percent stake and especially management control,” he added. “The futures commodity business is a highly leveraged one, and we wouldn’t be interested unless we had control.”
Under the second phase of the Closer Economic Partnership Arrangement signed by Hong Kong and the mainland late last year, Hong Kong-registered brokerage firms can own up to 49 percent of joint-venture futures brokerages on the mainland. Non-Hong Kong foreign brokerages are limited to a 33 percent stake in joint-venture securities brokers.
Wong said futures brokerages, which generally have more institutional clients on the mainland than securities brokerages, “have less worries about owning portfolios where the integrity of company personnel is questioned.” They are also usually in better shape than their securities counterparts. Many of the mainland’s over 130 securities brokerages have been grappling with losses.
Tai Fook’s latest move across the border comes as the financial firm changes its strategic focus.
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