Citic Securities Plunges 8% After Estimate Cut: Hong Kong Mover

Citic Securities Co. (6030), China’s largest brokerage by market value, fell to the lowest in almost two years in Hong Kong trading after Credit Suisse AG cut its profit estimate by 12 percent.

Citic fell as much as 8 percent to HK$12.24, the lowest since October 2011, the month it started trading in the city, and traded at HK$12.36 at 3:31 p.m. The benchmark Hang Seng Index fell 2 percent.

“The Chinese regulator has put IPO issuances on hold since last October and this is having a prolonged impact on the brokers, and especially on their 2013 earnings,” Frances Feng and Arjan Van Veen wrote in a note, cutting their share price estimate to HK$14.50 from HK$16.50. “We expect Citic to see the biggest hit given the scale of its investment banking business.”

The China Securities Regulatory Commission is drafting new rules for share sales to beef up investor protection, and has rebuked or punished at least three brokerages for inadequate due diligence on IPOs. The country’s stocks entered a bear market June 24, plunging on concern a cash squeeze will hurt economic growth. China’s Shanghai Composite index declined today for the first time in four days.

To contact the reporter on this story: Nathaniel Espino in Beijing at nespino@bloomberg.net

To contact the editors responsible for this story: James Gunsalus at jgunsalus@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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