Nissan Century moves into Chinese equities

Nissan Century Securities Co. is the latest Japanese brokerage to offer Chinese stocks in a bid to bolster revenue as local shares lag the global markets.

Average daily trading on the first section of the Tokyo Stock Exchange dropped 21 percent this fiscal year through October. In the same period, the Nikkei 225 stock average advanced 13 percent, while Hong Kong's Hang Seng Index surged 45 percent when valued in yen. Nissan Century's move also comes amid intensifying competition to lower brokerage commissions.

"Yields from Japanese equities are declining and the market here is too localized," said Takehiko Nuki, president of Nissan Century, a subsidiary of Unicom Group Holdings Inc. "Clients have high expectations for Chinese stocks."

Nissan Century's commission income for March was ¥2.4 billion, of which 70 percent to 80 percent was from Japanese shares and 20 percent to 30 percent from mutual funds. The brokerage aims to increase revenue from trading in Chinese shares to the same level as mutual funds, Nuki said.

The deregulation of brokerage transactions 10 years ago as well as the growth in Internet securities trading has led to lower commissions. Average fees for the 121 securities houses listed on the TSE fell to 0.07 percent in March this year from 0.38 percent in March 1998, according to TSE data.

Small to midsize brokerages, which tend to be reliant on trading of domestic shares, have been hit hardest, said Nuki. Toyo Securities Co., based in Hiroshima, was ahead of the market by establishing a local subsidiary in Hong Kong in 1987 and now deals with almost every blue-chip stock listed on the Hong Kong stock exchange.

Toyo Securities' trading commissions on Japanese shares from April to September fell 18 percent to ¥914.6 billion while those on Hong Kong and Chinese stocks have risen 80 percent to ¥100.3 billion.

"We want to increase this to the same level as the Japanese stocks we handle," said Masaaki Oohata, managing director at Toyo. "We intend to increase it to 50 percent of trades."

Naito Securities Co., based in Osaka, obtained a license in 1995 to trade in Chinese B shares, which are priced in U.S. or Hong Kong dollars.

There are now 15 local brokerages that deal in Chinese shares, three more than last year, said Naito Securities operating officer Masahiro Hirose.