China brokerage shares spike on asset-backed securities plan

SHANGHAI Tue Feb 26, 2013 10:03pm EST

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SHANGHAI Feb 27 (Reuters) - Shares of Chinese brokerages jumped on Wednesday after the mainland market regulator issued draft rules that would make it easier for brokerages to package, securitise and resell a wide range of assets, such as real estate or commercial paper.

By 0255 GMT, Haitong Securities , the second-largest listed Chinese brokerage, was up 3.7 percent in Shanghai and 2.0 percent in Hong Kong. Its larger rival, Citic Securities jumped 2.8 percent in Shanghai and 2.7 percent in Hong Kong.

The gains helped both Haitong and Citic bounce off one-month lows in Shanghai, as benchmark indices recovered from steep losses on Tuesday.

"This will expand the scope for product innovation for Chinese brokerages, but more care needs to be taken to make sure these new products are not too complicated given what has happened in the past," said Zhang Qi, a Shanghai-based analyst with Haitong Securities.

The new plan, if approved, will open another channel for liquidity to move into the real economy, but draft rules issued late on Tuesday did not include a date for implementation and are intended to solicit feedback.

China launched a pilot programme to test asset-backed securities (ABS) in 2005, but suspended the programme during the global credit crisis. Mortgage-backed ABS were widely blamed for the onset of the global financial crisis in 2008.

Beijing relaunched the project in 2012 and has gradually expanded the programme since.

($1 = 6.2339 Chinese yuan) (Reporting by Clement Tan; Editing by Richard Pullin)

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