HK Stock Market Move | Chinese-funded securities companies' stocks lead the gains, the chairman of the China Securities Regulatory Commission proposes expanding the capital space for securities firms, and high-quality securities firms are expected to break through the ROE ceiling.

Chinese-funded securities firms lead the gains, as of the deadline, Soho Holly Futures (03678) rose 10.91%, trading at 3.76 Hong Kong dollars; Huatai (06886) rose 7.56%, trading at 19.77 Hong Kong dollars; Guotai Haitong (02611) rose 6.74%, trading at 16.64 Hong Kong dollars; CITIC SEC (06030) rose 5.38%, trading at 28.6 Hong Kong dollars; China Galaxy (06881) rose 5.16%, trading at 11.01 Hong Kong dollars. On the news front, on December 6, Wu Qing, chairman of the China Securities Regulatory Commission, proposed at the eighth member conference of the China Securities Industry Association that differentiation and characteristic development in investment banking should achieve new breakthroughs, and regulatory policies should "support the good and restrict the bad," with appropriate relaxation for high-quality institutions. Wu Qing particularly emphasized that top investment banks are not exclusive to leading institutions, and small and medium-sized institutions should also grasp their advantages, develop in a differentiated manner, concentrate resources and cultivate in specific areas such as segmented fields, characteristic customer groups, and key regions, striving to build "small yet exquisite" boutique investment banks, characteristic investment banks, and characteristic service providers. Wu Qing stated that the CSRC will focus on strengthening differentiated regulation and "supporting the good and restricting the bad" in regulatory policies. High-quality institutions will be appropriately relaxed, risk control indicators will be further optimized, capital space and leverage limits will be moderately opened up, and capital utilization efficiency will be enhanced. In terms of regulatory support, Chairman Wu Qing mentioned that "appropriate relaxation for high-quality institutions, further optimization of risk control indicators, moderate opening up of capital space and leverage limits... exploring and implementing differentiated regulation in categorizing evaluation and business access for small and medium-sized securities firms and foreign-funded securities firms," which is another clear optimization of risk control indicators and opening up of leverage limits since the CSRC revised the "Regulations for the Calculation Standards of Risk Control Indicators of Securities Companies" in September 2014. It is expected that subsequent related policies will be implemented, and the ceiling of ROE for high-quality securities firms is expected to be lifted.