China's Haitong Securities plans $3.86 billion Hong Kong private share placement

In a statement issued late on Sunday, the brokerage said it would issue 1.917 billion new Hong Kong-listed H-shares at HK$15.62 each to a number of institutional investors. It said Dawn State Ltd, Vogel Holding Group Ltd and Amtd Special Holdings Ltd would be among buyers.

Stocks in brokerages have jumped in recent months, with Haitong posting its highest ever quarterly profit for the three months ended September. Trading volumes have surged, propelled by a surprise cut in China's interest rate and the launch of a program, known as the Stock Connect, that allows investors in Hong Kong and Shanghai stocks to trade directly on each bourse.

CITIC Securities Co Ltd, China's top listed broker by market capitalization, also may cash in on rising share prices. On Dec. 7, it said it does not rule out the possibility of shoring up its capital via a share issue within the next three months, without disclosing what it would use proceeds for.

The Haitong share issue is subject to shareholder and regulator approval, according to the statement.

Up to 60 percent of proceeds will be used for the development of margin trading in mainland China, the brokerage said in a filing to the Shanghai Stock Exchange. Any surplus will be used for the development of structured products and working capital among other things.

Margin trading on mainland bourses has jumped, with a bull run on the domestic stock market pushing China's blue-chip CSI300 index up 45 percent so far this year. On the Shanghai Stock Exchange alone, the outstanding value of borrowings for margin trading has reached 672 billion yuan, more than double end-July's 284 billion yuan.

Haitong's H-shares hit a historic high of HK$23.20 on Dec. 9. Its shares closed at HK$18.60 on Friday.

(US$1=HK$7.753)

(Reporting by Lu Jianxin and Engen Tham; Editing by Kenneth Maxwell)