Brokerages Fall More in China as They Jump in Hong Kong

Shares of Chinese brokerages kept falling on the mainland on Tuesday as they bounced back in Hong Kong.

The difference: declines in Shenzhen and Shanghai shares had been limited Monday by those markets’ 10 percent limits on price swings, a protection that doesn’t exist in Hong Kong.

Citic Securities Co., the nation’s biggest brokerage, fell 8.4 percent at the trading break in Shanghai, after a 10 percent decline the previous day. In Hong Kong, its stock rose 6.1 percent, after plunging 16 percent yesterday to cap a record one-day slump.

“There’s probably more selling pressure for brokerage shares in the A-share market as they’ve fallen less than those in Hong Kong yesterday,” Edmund Law, an analyst at UOB-Kay Hian Holdings Ltd. in Hong Kong said by phone. “The shares in Hong Kong are rising as they are trading at a discount.”

Citic Securities currently fetches a 35 percent premium on the mainland, data compiled by Bloomberg show. Haitong Securities Co. rallied 7.2 percent in Hong Kong and fell 7.3 percent in Shanghai today, paring its mainland premium to 46 percent.

The China Securities Regulatory Commission’s Jan. 16 decision to ban Citic, Haitong and unlisted Guotai Junan Securities Co. from adding new margin loan accounts for three months triggered the domestic stock market’s biggest drop in six years.

— With assistance by Aipeng Soo, and Jonathan Burgos

Before it's here, it's on the Bloomberg Terminal.