China brokerages in investors' bad books

ALMOST 12 months after they were forced to buy up stocks to put a floor under the market, China's brokerages are in a bad place again.

The anticipated trading rush after a link between the Hong Kong and Shenzhen stock exchanges opened on Dec 5 hasn't eventuated and investors are punishing firms including Guotai Junan International Holdings Ltd and Haitong Securities Co, whose shares had rallied in the lead up to the connect. Brokerage houses are also dealing with a bond rout, showing how precarious a bet on the sector can be.

Shenzhen's slew of new-economy stocks and a wide variety of mid-caps in Hong Kong had many predicting a lot more cross-border action than when the Hong Kong and Shanghai exchanges opened a similar channel in November 2014. Yet, volumes on both sides have disappointed. Only a small portion of the daily quota has been used both ways.