Preview of New Stocks in the U.S. Stock Market | Amid the ups and downs of the Hong Kong stock market, licensed securities firms suffer losses as they seek listing in the United States.

In the backdrop of a sluggish Hong Kong stock market, intense industry competition, stricter regulatory policies, and higher transaction costs, it seems that closure, transformation, or seeking a new start are the unspoken development choices for the Hong Kong securities industry in 2023. According to data from the Hong Kong Stock Exchange, 27 Hong Kong securities firms have suspended or ceased operations so far this year, a number close to the same period last year. In this context, the survival pressure for small and medium-sized securities firms in Hong Kong is not optimistic. To seek survival, many Hong Kong securities firms have reached out to the US stock market. Recently, One Securities, which submitted an IPO application to NASDAQ on June 30th, updated its prospectus, with the stock code WIN. However, facing the downturn in the Hong Kong market and the various pressures of the external environment, whether One Securities can successfully enter NASDAQ and whether it can achieve a "beautiful victory" after listing have become the focus of investors' attention. One Securities is a financial services provider headquartered in Hong Kong, mainly engaged in underwriting and placement services, securities trading and brokerage services, and asset management services, holding licenses No. 1, 4, and 9 issued by the Hong Kong Securities and Futures Commission. According to the prospectus, One Securities' business model mainly includes three aspects: underwriting and placement services, securities trading and brokerage services, and asset management services, which are similar to traditional securities firms in Hong Kong and are mainly operated through One Securities and One Asset Management. In terms of revenue, in the past fiscal years 2022 and 2023 (fiscal year ending on March 31), One Securities' revenue was $3.2593 million and $2.3064 million respectively, which is not large compared to other Hong Kong capital securities firms. In the past two fiscal months, the company's net losses were $0.2072 million and $0.5133 million, recording consecutive losses for two years. Analyzing the revenue structure further, in the fiscal years 2022 and 2023, One Securities' revenue mainly came from underwriting and placement services, securities trading and brokerage services, and asset management services, showing dramatic fluctuations. In 2022, underwriting and placement services only generated $0.3553 million, accounting for only 15.4% of the total revenue, while securities trading and brokerage services, particularly brokerage commissions, accounted for $0.7413 million or 32.1% of the revenue. In 2023, the revenue from underwriting and placement services dramatically increased to $1.5746 million, accounting for 46.3% of the total revenue, while asset management services seemed to have a relatively small proportion. In terms of expenses, in the past fiscal years 2022 and 2023, One Securities' main costs and expenses included personnel costs, operating and administrative expenses, and interest expenses, with personnel costs accounting for the highest proportion at 65.6% and 67.8%, followed by operating and administrative expenses at 25.9% and 23.8%. One Securities stated that it has been continuously optimizing its cost structure and risk control, reducing its financial and operational risks, and safeguarding its asset quality and debt repayment ability. In fact, One Securities' struggling operation seems to be closely related to the market conditions in Hong Kong. In 2022, Hong Kong's capital market experienced a continuous downturn due to various factors such as overseas central banks entering an interest rate hike cycle, continuous geopolitical conflicts, and fluctuating mainland China's COVID-19 situation. In terms of primary market, there were only 80 HKEX IPO companies in 2022, the lowest level since 2013. The IPO and fundraising amount totaled $32.193 billion, a year-on-year decrease of 67.3%, the lowest level since 2008. In the secondary market, the Hong Kong stock market has shown a downward trend due to the drastic fluctuations in the external environment and the pessimistic sentiment of foreign capital as well as the expectation of continued tightening of liquidity. As of October 27th, the Hang Seng Index and the Hang Seng Tech Index had accumulated declines of 12.05% and 7.82% respectively since the beginning of the year. With the overall market sentiment being low, limited investment opportunities in the Hong Kong stock market and a weak market environment have hindered the growth of One Securities' business, which is more apparent when it comes to the main sources of its revenue. In this regard, One Securities warns in its risk factors that its business operations are conducted in Hong Kong. The operating results and prospects are highly dependent on any changes in government policies, as well as the economic, social, political, and legal developments in Hong Kong. Events that adversely affect investors' confidence and risk appetite may lead to a decrease in investment or trading activities, resulting in a decrease in its business performance. Although the Hong Kong stock market may have hit bottom and rebounded, the future prospects of One Securities remain uncertain. According to the prospectus, One Securities seems to have a clear understanding of its situation: the financial services industry in which it operates in Hong Kong is fiercely competitive, highly diversified, and ever-changing, and this situation is expected to continue. As of June 30, 2022, there were 711 registered trading right holders with Hong Kong Exchanges and Clearing Limited, including 623 exchange participants, 74 non-exchange participants, and 14 non-exchange participants. On the other hand, according to the market and industry statistics published on the website of the Securities and Futures Commission of Hong Kong, there are 1,509, 1,838, and 2,039 entities licensed to engage in regulated activities under the Securities and Futures Ordinance of Hong Kong in Class 1 (securities trading), Class 4 (providing advice on securities), and Class 9 (asset management), respectively. The number of competitors is only a partial factor. More severe is the fact that according to statistics from the Securities and Futures Commission of Hong Kong in 2022, the total annual net losses of Group C brokers (securities firms ranked after 65th in the Hong Kong market) amounted to HKD 4.2 billion, and small and medium-sized securities firms are generally under pressure. In addition, whether in brokerage business or investment banking business, there is a trend of concentration towards major institutions in the Hong Kong stock market this year, and the Matthew Effect is becoming more pronounced. In a situation where neither scale nor resources are advantageous, Hong Kong small and medium-sized securities firms like One Securities often seek to expand their business scale through mergers and acquisitions and pursue IPOs to raise "provisions" for further battles. For example, Huaying Securities, another Hong Kong securities firm, submitted an IPO application to the SEC in April this year. At the same time, although the Hong Kong stock market may have hit bottom and rebounded, theThe long-awaited turning point is coming. Following the reduction of stamp duty on A shares, Hong Kong stocks have also officially announced a reduction in securities transaction stamp duty. On October 25th, Hong Kong Chief Executive John Lee Ka-chiu stated in the annual policy address that the stock transaction stamp duty rate will be reduced from the current 0.13% to 0.1%. The government plans to complete the legislative process by the end of November.Regarding this, the founder believes that the reduction in stamp duty is expected to stimulate trading sentiment in the short term and increase trading volume; CICC believes that the reduction in stamp duty rates will boost the market in the short term from an emotional perspective. After the reduction in stamp duty, the index level is expected to experience a stage of uplift, but the trend is not consistent, which also indicates that continuous rebound still requires more fundamental factors to cooperate. In the medium and long term, the reduction in stamp duty is advantageous in reducing transaction friction costs, enhancing market liquidity, and increasing the central trading volume. From this perspective, even though the past two fiscal years have had a net loss, the revenue of the company mainly comes from placement and underwriting services, which generally have higher profit margins and growth prospects. If the market environment improves and customer demand increases, the company still has the potential to achieve stable income growth and increase CKH HOLDINGS profit. However, for the current stage, it is crucial for One Profit to enhance its competitiveness and successfully survive until "dawn".