Chinese state-owned brokerage China Galaxy Securities is planning a $1.5 billion initial public offering to grow its securities lending and margin financing business among other businesses.
90% of Hong Kong-based offering will be allocated to institutional investors, with the remainder to retail investors, according to company filings. Galaxy is one of 11 mainland brokerages that can borrow securities from 90 listed blue chip firms in China the country seeks to liberalize short selling, according to reports. The move is part of a pilot project, launched in August last year, intended to liberalize shortselling and boost China’s derivatives markets.
Since the start of the pilot, Chinese brokerages have only been allowed to borrow money from institutional investors. The 90 stocks available for borrowing represent 9.3 trillion yuan (HK$11.5 trillion) in tradable capitalization, nearly 50% of the mainland’s A-share market. Other brokerages include CITIC Securities, Everbright Securities, GF Securities, Guotai Junan Securities, Haitong Securities, Huatai Securities, Shengyin Wanguo Securities and China Merchants Securities.