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Breakingviews - Capital Calls: Boutique bank rides tech boom

The company logo of China Renaissance Group, an investment bank led by one of the country’s most famed rainmakers, is shown on a presentation during a news conference on its IPO in Hong Kong, China September 13, 2018.

HONG KONG (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.

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PROFIT CHARMING. Technology-focused China Renaissance is doing better than some of its clients’ share prices. The Hong Kong-listed investment bank said on Monday it expects a 311% rise in net profit for 2020. Gains come from its investment management unit and its advisory work, which included fintech lender Lufax’s $2.4 billion New York initial public offering and the $3.5 billion Hong Kong debut of JD Health.

Shares jumped over 9% on the news, leaving China Renaissance just shy of last month’s all-time peak. That only adds to its relative priciness: the stock trades at 1.9 times estimates of its book value for 2021, versus 1 times for the Hong Kong shares of rival China International Capital Corporation and 1.4 times international giant Morgan Stanley.

Bankers are off to a good start in 2021 with listings galore planned but both those and the chances of China Renaissance repeating its gains depend on stocks remaining all charged up. (By Jennifer Hughes)

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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