China's CITIC Securities plans up to 1.5 billion new H-share issue

SHANGHAI (Reuters) - Chinese biggest stock brokerage CITIC Securities said it plans a new public issue of up to 1.5 billion Hong Kong-listed H-shares to supplement capital to help expand businesses including margin trading in China's mainland.

In a statement issued late on Sunday, the brokerage said the issue would be implemented within 12 months pending on shareholder and regulatory approval.

CITIC Securities did not say how much money it aims to raise. Its H-shares closed at HK$27.75 on Friday, and based on that price, it could raise as much as HK41.6 billion (S$7.10 billion), but Chinese companies typically give some discount in pricing new share issues.

CITIC Securities, China's top listed broker by market capitalisation, became the latest mainland broker to plan to tap into soaring share prices to bolster capital.

Haitong Securities Co Ltd , China's second-biggest listed broker, has also announced a plan to raise HK$29.94 billion in a private share placement in Hong Kong, also mainly to expand margin trading business.

Stocks in brokerages have risen in recent months, buoyed partly by their surging profits, with CITIC Securities third-quarter earnings jumping 44 per cent from a year earlier.

Trading volumes have also surged, propelled by a surprise cut in China's interest rate and the launch of the Stock Connect programme that allows investors in Hong Kong and Shanghai stocks to trade directly on each bourse.

CITIC Securities said up to 70 per cent of proceeds will be used for the development of margin trading in mainland China and other intermediate businesses, the brokerage said in a filing to the Shanghai Stock Exchange.

Twenty percent will be used for the development of cross-the-border businesses and the remaining 10 per cent for consolidation of the company's working capital, it said.

Margin trading on mainland bourses has jumped, with a bull run on the domestic stock market pushing China's blue-chip CSI300 index up 48 per cent so far this year.

On the Shanghai Stock Exchange alone, the outstanding value of borrowings for margin trading has reached 684 billion yuan (S$145.33 billion) more than double end-July's 284 billion yuan.