China Broker Haitong Halts Share Buyback; Cites Risks

Haitong Securities Co., one of China’s biggest brokerages, halted a $3.3 billion share buyback that it announced during the nation’s stock-market meltdown over the summer, citing potential risks to its operations, liquidity and credit ratings.

Some bondholders had asked for additional guarantees if Haitong went ahead with the buyback, the brokerage told Shanghai’s stock exchange on Tuesday.

In July, Haitong said that it planned to spend as much as 21.6 billion yuan ($3.3 billion) in a buyback of mainland and Hong Kong stock. That announcement came just as the Chinese government was rolling out a series of measures to stabilize the market.

In the latest statement, Haitong cited the scale of its outstanding domestic bonds -- 66 billion yuan -- and said that it has overseas debt as well.

Haitong had said it would pay as much as 18.8 yuan apiece for its mainland-listed shares and as much as HK$17.18 apiece for the Hong Kong shares. The mainland shares are currently about 14 percent below that level, the Hong Kong stock 20 percent below.

The buyback plan came amid market support measures including temporary bans on major shareholders selling stakes in listed companies.

— With assistance by Paul Panckhurst, and Penny Peng

(Corrects third paragraph to say Haitong planned to spend 21.6 billion yuan.)
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