Brokerage surges 32% on trading debut
Print Edition
SHARES of newly merged Shenwan Hongyuan Group Co surged on their first trading day yesterday, propelling the brokerage to rank as China’s second-largest by market value.
Its Shenzhen-listed shares jumped 32.06 percent to close at 19.65 yuan (US$3.14) after soaring as much as 41 percent. The huge gain triggered a trading suspension in the morning session.
Shenwan Hongyuan set its offering price at 14.88 yuan per share, with a price-to-book ratio at 6 times, higher than the average of 3.5 times among large listed brokerages, according to Haitong Securities.
The surge yesterday boosted Shenwan Hongyuan’s market value to 291.9 billion yuan, second only to the 315.3 billion yuan of China’s largest brokerage CITIC Securities.
The surge also made the brokerage the biggest listed firm on the Shenzhen Stock Exchange, replacing Guosen Securities, which has surged 293 percent since its debut last month.
Shenwan Hongyuan emerged from China’s largest buyout in the industry which saw unlisted Shenyin & Wanguo Securities take over listed Hongyuan Securities in a deal valued at 39.6 billion yuan. The deal marked efforts by Central Huijin Investment Ltd, parent of Hongyuan and Shenyin & Wanguo, to consolidate its brokerage business.
Central Huijin, a domestic investment arm of China’s sovereign wealth fund, holds stakes in eight brokerages directly or through subsidiaries.
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