The Zhitong Finance App learned that Fitch Ratings believes that the deeper integration of Hong Kong's capital markets with mainland China will enhance the financial position of Fitch Ratings Hong Kong Securities and reinforce its view that the Chinese parent company is strategically important. These companies have more favorable conditions than their local peers to expand their market share and position, thanks to established and closer links with Chinese enterprises whose demand for offshore financing is rising, as well as the growing demand from investors for cross-border wealth management services.
Fitch expects that accredited Hong Kong brokerage firms, particularly the Hong Kong subsidiaries of Chinese brokerage firms, will account for a larger share of initial public offering (IPO) activities. This is due to the growth of dual listings and technology-related deals, and these companies have established customer relationships and execution advantages. Given that the Hong Kong brokerage firms are more dependent on equity market-related transactions, the continuous improvement of the capital market environment should further support the increase in their profitability.
Fitch believes that the interconnection of the cross-border stock market is expected to extend to the bond market in the medium term. Policies aimed at developing the Hong Kong bond market will help achieve this goal and help the assessed companies diversify their revenue streams. However, most of the accredited Hong Kong brokerage firms are still small; if there is a clear shift in market sentiment, the capital flow of mainland investors may be reversed, which in turn may affect the financial position of most Fitch Hong Kong brokerage firms.