Haitong Securities Decides to Remove Hong Kong Unit’s CEO After Big Losses, Sources Say

Haitong Securities Co. Ltd. has dismissed Lin Yong from his role as CEO of its significant Hong Kong subsidiary, Haitong International Securities Group Ltd., due to substantial losses linked to aggressive real estate investments [para. 1]. The company, which was removed from the Hong Kong stock exchange in January, will now likely be led by Zhuang Wei, currently the general manager at Haitong's Shenzhen branch [para. 2].

Lin Yong, who joined Haitong Securities in 1996 and moved up to lead its investment banking sector, was transferred to Hong Kong in 2007 to aid the firm's international expansion. By 2011, he had become CEO of Haitong International Securities [para. 3]. Under his direction, the company grew rapidly compared to its regional competitors by adopting a bold investment strategy without fear of risks [para. 4][para. 5].

During the 2010s, Haitong International heavily invested in U.S. dollar-denominated bonds issued by Chinese property developers and assisted them with financing solutions. This close financial relationship tied their fortunes together tightly [para. 6]. At its height, this subsidiary generated nearly two-fifths of Haitong Securities’ profits, earning Lin an annual salary exceeding 180 million yuan ($24.9 million) [para. 7].

However, the downturn in China’s property market starting in 2021 led to a surge in defaults on these dollar bonds [para. 8]. Consequently, Haitong International recorded over HK$4.3 billion ($549.4 million) in investment losses for 2022 alone and saw a drastic drop of nearly 85% in net profit for that year [para. 9]. By 2023, losses further expanded leading to a cumulative loss exceeding all profits made over more than a decade previously; this marked one of the largest losses ever by a mainland Chinese securities firm in Hong Kong [para. 10][para. 11].

In response to these challenges, Haitong Securities took its Hong Kong unit private and delisted it from the stock exchange earlier this year—a move aimed at resolving issues away from public scrutiny [para. 12]. A task force has been sent from Shanghai to assist with restructuring efforts at the troubled subsidiary. In July of this year, Song Shihao was appointed co-CEO as part of these efforts but had to step down shortly after due to health issues; subsequently eliminating joint leadership at Haitong International Securities [para. 13][para. 14].