Inside the Securities Houses that Power Hong Kong

Euromoney, November 2018

Its capital markets are dominated by mainland-backed houses, but don’t think of them as a homogenous group – each firm has its own quirks, strengths and character.

The march of mainland houses through the league tables of Asia’s capital markets is well-documented and relentless.  In the year to September 2017, China-related houses held eight of the top 10 spots for Asia ex-Japan debt capital markets wallet; the highest-ranked foreign house was HSBC in seventh, then Credit Suisse in 10th. In 2017, seven of the top eight were mainland-backed.

In equity capital markets, China-related houses hold four of the top 10 slots for wallet year to date, and took eight of the top 10 last year, including the top three.

We use the wallet rather than the volume table to show that, contrary to popular opinion, they are not working for peanuts. They might be deep in the syndicate, and some of them are never anywhere near a sponsor or joint global coordinator role, but they are earning money.

There is a tendency to think of mainland-backed houses in Hong Kong as a homogenous group, all bringing the same approaches and practices, all with the same characteristics. However, there is as much diversity in the approach of these houses as there is in that of Goldman Sachs and HSBC. This market has its own quirks and personalities, grudges and edges.

As a starting point, it is useful to think of Hong Kong’s mainland-backed houses on a continuum, with the securities houses at one end and the investment banking subsidiaries of the big four banks on the other.

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