Chinese financial firms press on with debt issuance to fund overseas expansion

Chinese financial institutions raised over US$10 billion last year to fund their overseas expansion and boost the yuan’s internationalisation in line with Beijing’s go-global push, with the trend continuing this year.\nGF Securities is raising HK$6.12 billion (US$780 million) from the placement of over HK$3.97 billion worth of new shares and HK$2.15 billion from zero-coupon convertible bonds.\nThe Guangzhou-headquartered brokerage planned to use the proceeds to inject capital into its offshore subsidiaries to support its international expansion, according to a filing to the Hong Kong stock exchange on Wednesday.\nLast year, a number of companies, including China Pacific Insurance, China Citic Bank, Industrial and Commercial Bank of China (ICBC) and China Everbright Bank, issued bonds, citing internationalisation as one of the key reasons, raising between US$300 million and US$2 billion in Hong Kong and other overseas markets.\n\n“While different players in the financial industry may have different reasons for raising funds, overseas expansion has become increasingly necessary rather than a choice due to squeezed domestic profit margins,” said Gary Ng Cheuk-yan, a senior economist at Natixis Corporate and Investment Bank.\nNg expected the globalisation push to continue to fuel financing activity as outbound investment and the yuan’s internationalisation bring additional opportunities.\nCitic, which listed US$300 million worth of bonds in London and Hong Kong in October, issued its maiden debt on the London Stock Exchange. Meanwhile, ICBC issued debt in Hong Kong, Macau, Singapore and Dubai under its US$20 billion multicurrency note programme.\nFor banks, issuing debt offshore offered overseas investors a diversification option and helped to widen the use of the yuan abroad, said Kenny Ng Lai-yin, a securities strategist at Everbright Securities International.\nBeijing embarked on the yuan’s internationalisation in 2009 as an option to the US dollar and to widen its use among its global trading partners. The yuan had since grown to become the world’s second-largest trade financing currency and the third-largest payment currency, according to a report by the People’s Bank of China in October.\nEverbright’s Ng said the revitalisation of Hong Kong’s stock market and the rising investment demands of mainland residents in a low-interest-rate environment had attracted Chinese brokerages to expand into the city. This came as their commission rates on the mainland had slumped over 90 per cent in the past decade amid stiff competition, he added.\nApart from GF Securities, at least nine mainland brokerages had announced capital injection plans into their offshore subsidiaries or planned to set up overseas operations last year.\nIn December, China Merchants Securities said it would pump at least HK$9 billion into its Hong Kong operations. In April, Huaan Securities said it would infuse HK$500 million into its Hong Kong unit as part of its cross-border expansion.\nLast month, Wu Qing, chairman of the China Securities Regulatory Commission, the mainland’s securities regulator, urged the brokerage industry to increase its international presence to build the country into a global financial powerhouse.\nMainland brokerages had set up 36 offshore subsidiaries as of June 2025, with total assets in overseas markets growing over 20 per cent year on year to HK$1.64 trillion, according to data from the Securities Association of China.\nAt the same time, at least 75 per cent of brokerages reported higher revenue contribution from their international units in the first six months of last year, the industry body added.\nHong Kong topped global markets last year on optimism in China’s tech sector, with the benchmark Hang Seng Index rising 28 per cent and the volume of initial public offerings surging 229 per cent to US$37.22 billion from a year earlier.\nMainland investors contributed to a net inflow of HK$1.4 trillion last year, up more than 70 per cent from a year earlier.\nWith Hong Kong’s stock market expected to remain active this year, Everbright’s Ng said mainland financial institutions, especially brokerages, would be motivated to expand in the city.\n