NMR - Nomura Holdings, Inc.

NYSE - NYSE Delayed price. Currency in USD
4.6900
-0.0600 (-1.26%)
At close: 4:00PM EDT
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Previous close4.7500
Open4.7100
Bid4.6800 x 900
Ask0.0000 x 3000
Day's range4.6650 - 4.7100
52-week range3.4000 - 5.4100
Volume186,021
Avg. volume256,333
Market cap14.404B
Beta (5Y monthly)N/A
PE ratio (TTM)16.99
EPS (TTM)N/A
Earnings dateN/A
Forward dividend & yield0.18 (3.90%)
Ex-dividend date30 Mar 2020
1y target estN/A
  • Nomura Holdings, Inc. (NMR) Q1 2021 Earnings Call Transcript
    Motley Fool

    Nomura Holdings, Inc. (NMR) Q1 2021 Earnings Call Transcript

    Please note that this telephone conference contains certain forward-looking statements and other projected results, which may involve known and unknown risks, delays, uncertainties and other factors not under the Company's control, which may cause actual results, performance or achievement of the Company to be materially different from the results, performance or other expectations implied by these projections. Mr. Takumi Kitamura, Chief Financial Officer, please go ahead. Good evening, this is Takumi Kitamura, CFO of Nomura Holdings.

  • Nomura's Bond-Trading Sugar Rush Won't Last
    Bloomberg

    Nomura's Bond-Trading Sugar Rush Won't Last

    (Bloomberg Opinion) -- Like its bulge-bracket Wall Street rivals, Nomura Holdings Inc. found volatility was its friend last quarter. The surge in trading revenue that drove a return to profit is unlikely to be sustained, though. Japan’s largest brokerage needs more than tinkering at the margins to drive a post-Covid recovery.Chief Executive Officer Kentaro Okuda, reporting his first set of quarterly results, can bask for now. Net income more than doubled to 142.5 billion yen ($1.4 billion) in the three months ended June 30, from 55.8 billion yen a year earlier, and rebounding from a loss in the March quarter. Revenue from the firm’s wholesale division, which houses its bond-trading activities, rose to a record. (A one-time gain from revaluation of Tokyo real estate also buoyed earnings.)The trading boom has lifted profits across U.S. investment banks. Goldman Sachs Group Inc.’s revenue from its fixed-income, currencies and commodities business more than doubled to the highest in nine years in the three months through June.These conditions won't last forever. Fixed-income trading gains reflect the U.S. Federal Reserve’s extraordinary efforts to keep credit flowing to companies during the Covid-19 pandemic. By nature, this will be a temporary fix. The current quarter has been slower for the wholesale business, Chief Financial Officer Takumi Kitamura said on a call with reporters. That echoes Goldman CEO David Solomon, who acknowledged that trading activity in June had already eased from the highs of March and April. Behind the bonanza in bond trading, a strength for Nomura, there are troubling signs. The Tokyo-based firm is lagging behind in Japanese equities underwriting, where it should expect to lead. Nomura ranks fifth for domestic equity fundraisings in the period since April 1. (It remains first for domestic corporate and municipal bonds.)Okuda has focused on cost-cutting to steer Nomura through the global economic slump triggered by the pandemic. The brokerage has cut dozens of investment-banking jobs in the U.S., Gillian Tan of Bloomberg News reported before the results, citing people with knowledge of the matter. Nomura is also closing its Instinet equity-research division in the U.S. Okuda, meanwhile, is reviewing the firm’s need for office space as the pandemic prompts a shift to working from home.These efforts are showing some progress: Employee numbers fell to 6,118 as of June 30, from 6,684 a year earlier, in Asia outside Japan; to 2,164 from 2,230 in the Americas; and to 2,728 from 2,775 in Europe. Nomura is also beefing up in selected areas, such as buying boutique investment bank Greentech Capital Advisors late last year to strengthen its presence in the fast-growing environmental, social and governance area.Okuda will have to do more and move faster, however, if he’s to please investors who have turned away from the stock. Nomura shares have underperformed the Topix this year and are trading at little more than half of book value.For all the cost-cutting, the bank’s expenses are at their loftiest in at least five quarters. Compensation and benefits for the three months through June rose to 138.3 billion yen, from 125.1 billion yen a year earlier. While higher revenue and profit imply increased expenses (bond traders can probably expect some hefty bonuses), it’s a trend Nomura needs to watch.Even before Covid, competition from online brokers had been intensifying at home. That’s partly what prompted the $1.3 billion cost-cutting program announced by Okuda’s predecessor in April last year. The pandemic has only increased the pressure for a bigger and bolder revamp. A bumper quarter has bought some time. Nomura’s CEO should use it wisely before the glow fades. (Updates with bond rankings in the fifth paragraph. An earlier version of this column corrected the figure for current employees in Europe in the seventh paragraph.)This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Nomura Joins Wall Street Giants in Profiting From Trading
    Bloomberg

    Nomura Joins Wall Street Giants in Profiting From Trading

    (Bloomberg) -- Nomura Holdings Inc. swung back to profit last quarter, benefiting from the buoyant trading conditions that lifted the earnings of Wall Street peers Morgan Stanley and Goldman Sachs Group Inc.Net income more than doubled to 142.5 billion yen ($1.4 billion) in the three months ended June 30, as revenue from the wholesale division climbed to a record. Still, Chief Financial Officer Takumi Kitamura struck a cautious tone as the coronavirus pandemic batters the global economy and prompts new Chief Executive Officer Kentaro Okuda to review businesses.“While we achieved a very strong result this time, we are not in a situation where we can be that optimistic,” Kitamura told reporters Wednesday. “We’d like to proceed with efforts including cost reduction and business portfolio reviews.”Nomura has cut dozens of jobs at its investment bank in the U.S., people with knowledge of the matter told Bloomberg earlier. The firm notified some workers on Tuesday, according to the people, who said less than 10% of the investment-banking staff in the U.S. are affected.“Clients’ needs may change in the post-coronavirus era,” Kitamura said, declining to comment directly on the news. Nomura’s wholesale activities have cooled in the current quarter, he said.Revenue from fixed-income trading jumped to the highest ever, helping the global markets business generate a record 232.6 billion yen. Investment banking revenue fell amid a slump in equity underwriting and merger deals in Japan. The five biggest U.S. investment banks generated $33 billion in trading revenue during the period.“This is a very good first quarter, especially in the global markets business,” said Toshihiro Matsuo, an analyst at S&P Global Ratings. “It wasn’t a big surprise per se following the results of U.S. investment banks, but it showed that Nomura is on a similarly strong trend.”The fiscal first-quarter profit was helped by a 71.1 billion yen valuation gain on its Tokyo headquarters stemming from the redevelopment of the Nihonbashi business district. It compares with a surprise loss in the previous quarter, when Nomura suffered paper losses on loans and securities during the pandemic-fueled market turmoil.The domestic business serving retail investors also saw profit rise, even after branch windows were closed due to a national state of emergency to combat the outbreak.Shares of Nomura closed 0.7% lower before the results were announced, taking this year’s decline to 15%.Result HighlightsWholesale revenue surged to 248.7 billion yen. Revenue from global markets business, which includes trading for institutional clients, jumped 71%, while investment banking logged a 32% decrease.Overseas operations saw pretax profit more than double from a year earlier to a record 64.2 billion yen, led by the Americas.The retail division saw pretax profit climb 86% to 15.1 billion yen.Pretax profit from asset management rose 6% from a year earlier. That compared with an 8.7 billion loss in the previous quarter.(Updates with CFO’s comment on this quarter’s activity in the fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • TSMC Pares Gains After $72 Billion Surge to Start the Week
    Bloomberg

    TSMC Pares Gains After $72 Billion Surge to Start the Week

    (Bloomberg) -- Taiwan Semiconductor Manufacturing Co. kept up its record-breaking streak Tuesday, briefly becoming the world’s 10th most valuable corporation before paring gains.Taiwan’s biggest stock was up around 1.2% in Taipei, after rising as much as 9.9% and going beyond $410 billion in value, leapfrogging U.S. giants Johnson & Johnson and Visa Inc. in the process. Daily stock moves are capped at 10% in Taiwan’s equity market.It’s difficult to overstate the influence that TSMC wields on Taiwan’s financial markets. Making up almost a third of the local benchmark, it has single-handedly pushed the Taiex past a record that had stood for three decades. Its rally is attracting foreign flows into Taiwanese equities, increasing demand for the local currency. The Taiwan dollar rose 1% Tuesday to the strongest since April 2018.The latest boost to TSMC’s shares came after Intel Corp. warned last week that its 7-nanometer chips are behind schedule and it may outsource their production. The U.S. chipmaker is expected to funnel new business to TSMC, given its global lead in silicon fabrication and track record of making semiconductors for the world’s largest tech corporations.Intel’s struggles are buoying stocks in Asian suppliers of made-to-order chips. Samsung Electronics Co., which is investing heavily in its own foundry business, jumped as much as 5.8% Tuesday, its biggest intraday gain in almost two months. Chinese rival Semiconductor Manufacturing International Corp. climbed 6.6% in Hong Kong.“Samsung Electronics’ position as a foundry partner is expected to rise. Korean investors anticipate that Samsung could produce Intel’s CPU and discrete GPU,” Hana Financial Investment analysts wrote in a note. But “to narrow the gap with TSMC, it is essential for Samsung to expand its Austin fab.”A report on Monday suggested that Intel had placed orders with TSMC for 180,000 units of 6nm chips for 2021. Meanwhile, brokerages including Nomura Holdings Inc. and Credit Suisse Group AG upgraded TSMC to the equivalent of buy.(Updates with share price and analyst comment from first paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • TSMC’s $35 Billion Rally Puts Taiwan Stock Index Above 1990 Peak
    Bloomberg

    TSMC’s $35 Billion Rally Puts Taiwan Stock Index Above 1990 Peak

    (Bloomberg) -- Taiwan’s equity benchmark broke a record that stood for three decades, helped by the biggest surge in years for the economy’s biggest stock.The Taiex closed 2.3% higher Monday as Taiwan Semiconductor Manufacturing Co. soared the 10% daily limit. The $35 billion addition to its market capitalization makes TSMC the 12th most valuable stock worldwide, ahead of U.S. retail giant Walmart Inc. The chip producer for the likes of Apple Inc. wields so much influence over Taiwan’s 921-member stock benchmark that without it, the Taiex would be down about 2% this year versus its 5% gain.The latest boost to TSMC’s shares, which were already up 17% for the year before Monday, came after Intel Corp. warned last week that its 7-nanometer chips are behind schedule and it may outsource their production. The U.S. chipmaker is expected to funnel new business to TSMC, given its global lead in silicon fabrication and track record making semiconductors for the world’s largest tech corporations.TSMC’s $160 billion-plus rally since March follows a global tech resurgence and has resuscitated the local stock market. Like Japan, Taiwan saw a bubble in its equities burst three decades ago, and it’s been a long climb back.But with a global rush into tech shares pushing the Nasdaq Composite Index to a record this month, overseas investors sent more than $850 million into Taiwan’s tech-heavy stock market. That’s the largest net inflow among Asian markets tracked by Bloomberg, with most of Taiwan’s likely going into TSMC. It makes up almost a third of the market-cap weighted Taiex. The inflows have also helped push Taiwan’s dollar to the strongest level versus the U.S. dollar since 2018.TSMC is among the few companies that have weathered the coronavirus outbreak without suffering a severe slowdown in business. Long-term investments in fifth-generation wireless technology and high-performance computing from its customers have sustained order volumes and the company even raised its 2020 outlook and expects capital expenditure to climb to as much as $17 billion.Read more: Intel Plunges as It Weighs Exit From Manufacturing ChipsA report on Monday suggested that Intel had placed orders with TSMC for 180,000 units of 6nm chips for 2021. Meanwhile, brokerages including Nomura Holdings Inc. and Credit Suisse Group AG upgraded TSMC to the equivalent of buy.Aletheia Capital did as well, with analysts Stefan Chang and Warren Lau writing in a note that TSMC “will capture a sizable share” of Intel business. That “could lead to TSMC raising its current long-term growth of 5-10%,” they said. “Such a structural shift in industry dynamics outweighs our previous concerns.”Taiwan’s stocks have proved resilient to both the pandemic and China-U.S. disputes this year. Local investors have also touted President Tsai Ing-wen’s efforts in containing the spread of the coronavirus, success that has kept the economy on track. Listed companies saw sales rise 6% in June from a year earlier, the strongest growth since October 2018, the Taiwan Stock Exchange said July 13.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Amazon India Partner’s Bonds Slump After Missed Payment
    Bloomberg

    Amazon India Partner’s Bonds Slump After Missed Payment

    (Bloomberg) -- Debt-ridden Indian retailer Future Retail Ltd. slumped in credit markets after missing a dollar bond interest payment Wednesday, the latest sign of mounting strains in the nation from the pandemic.The company’s dollar notes slid 10 cents to 51 cents on the dollar on Thursday afternoon, the biggest drop in over three months, according to Bloomberg-compiled prices. Amazon.com Inc. has an indirect stake in Future Retail and a partnership with the company.“Due to the nation-wide lock-down imposed to restrict the spread of COVID-19 pandemic, and consequent restricted business operations of the company the liquidity position has been affected,” Future Retail said in a statement on the Singapore Exchange late Wednesday. Read more details here.The retailer’s debt woes add to further signs of pain in India, which is hurtling toward its first economic contraction in more than four decades. The country is also struggling with one of the world’s worst bad loan ratios. Future Retail is the first Indian company to miss an interest payment on a dollar bond since the nation imposed the world’s most expansive lockdown in the end of March.Future Retail said it is in the process of ensuring that payment of the interest is made within a 30-day grace period. S&P Global Ratings warned on Wednesday that even if Future Retail makes its payment, its weak liquidity remains an “overarching credit risk.”Amazon and Future Retail signed a pact in January for the brick-and mortar retailer to sell everything from groceries to cosmetics, through Amazon’s sales channels. The missed payment “will certainly” have the potential to affect investor demand for India high-yield companies selling dollar bonds, according to Vishal Kulkarni, an analyst at Nomura Holdings Inc.Investor sentiment towards the nation’s junk bond market was already weak, with SoftBank Group Corp.-backed renewable energy company postponing a dollar bond offering last week.(Updates bond price and adds analyst comment in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • China Banks’ Latest Bailout: Where’s the Equity?
    Bloomberg

    China Banks’ Latest Bailout: Where’s the Equity?

    (Bloomberg Opinion) -- From the looks of it, Beijing is effectively attempting to inject equity into its small and medium banks. That may help keep them alive, but won’t do what regulators need from these institutions — to support the coming wave of defaults, bankruptcies, and a weakening economy across China’s corporate sector and households.China’s State Council said last week it would allow local governments to use their so-called special-purpose bonds to help replenish the weakest link in the financial system – capital buffers among regional lenders, which are operating in a more precarious environment than the country's large banks.But it isn’t so straightforward. Provincial governments will offer these instruments and then use the proceeds to buy convertible bonds issued by financial institutions. Earlier this year, central authorities increased the special-bonds quota, allowing for issuance of 3.75 trillion yuan ($531 billion) of such debt from 2.15 trillion yuan in 2019. Of this, around 380 billion yuan is available to support the banks, or a quarter of what’s left for the rest of 2020, according to estimates from analysts at Nomura Holdings Inc.Previous attempts to clean up the banks have ranged from central bank-linked bailouts, shareholder changes, and looser regulatory requirements. Beijing has brought in local governments and other state-backed institutions to serve as conduits. However, what the system needs is equity. This measure perhaps comes closest.The urgency of the problem can be gauged by the focus brought by the highest levels of power to the 4,000 small and medium banks carrying the burden of China Inc.’s recovery. Premier Li Keqiang told the cabinet that the lenders face “insufficient capital and limited ability to issue loans,” according to a release from the meeting, local news outlet Caixin reported. Around 15% of these institutions didn’t meet capital requirements and another 13% were considered high-risk by regulators as of April, according to the central bank.  Boosting capital buffers through convertible bonds is a solution that tries to make things work — on paper. Once sold, the difference between intrinsic and face value is accounted for as other equity instruments as a part of their core equity tier 1 capital, CreditSights Inc. analysts note. If the bond doesn’t convert, over time the equity recognition gets amortized to zero. How or if investors – in this case, local governments – will gain on the equity conversion isn’t clear. That’s usually the appeal of such debt; the fact that it’s highly uncertain will no doubt be troubling for the holders.  This recapitalization process is aimed at increasing the ability of banks to lend more. But they’re already providing lifelines to the legions of micro, small and medium enterprises that are struggling the hardest. Manufacturing Purchasing Managers Index data from last month showed their situations continued to deteriorate, dropping to 48.9 from 50.8 in May. Large enterprises rose to 52.1. That means the bad loans will keep coming for a while. The banks will have to find a way to digest them and absorb losses.This latest measure, then, points to the increasingly limited options that China has left to deal with its multi-trillion-dollar banking system. Last year, regulators resorted to bailouts, like the seizure of Baoshang Bank Co. and the case of Bank of Jinzhou Co., where the central bank effectively became a shareholder. Earlier this year, authorities said a plan to reform small and medium institutions was in the works and that shareholders would be scrutinized more.Yet the dilemma of Bank of Gansu Co. shows that supposed rescues aren’t always effective, and priorities may not be aligned. A state-backed provincial highway operator stepped in as the largest shareholder, but was dealing with its own balance sheet issues. Months later the company, which is also Gansu province’s biggest state-owned company, announced a 167.3 billion yuan refinancing to deal with debts on 37 government toll roads. It now plans to allocate around 30 billion yuan to new roads. The bank has said that it provides loans and carries out transactions for connected parties. It’s hard to imagine how a situation like this helps a troubled lender. This past week, the banking regulator put out a list of shareholders that will be forced to divest their holdings in financial companies. A statement said that some shareholders “have even used banks and insurers as ATMs, using illegal methods to misappropriate banking and insurance funds.”Local governments are already struggling with such tangled situations as well as a broader economy hit by Covid-19. Now, they’re on the hook for troubled banks, too. It’s unclear how the provincial convertible holders will repay their own special-purpose bonds. The debts can’t be paid off using fiscal revenues and are project specific.The reality is that this is a makeshift measure. Beijing is stopping short of taking these institutions — whose challenges are a product of its own regulations — onto its balance sheet. But that’s where they may be obliged to end up.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Revenge Doesn’t Explain Rise in Chinese Property Prices
    Bloomberg

    Revenge Doesn’t Explain Rise in Chinese Property Prices

    (Bloomberg Opinion) -- Real estate becomes a safe bet in uncertain times, and it’s proving true in China after months of pent-up demand from the pandemic runs into an outlook still filled with uncertainty.The problem, as we’ve seen time and again, is that anyone hoping for security from a market that’s heavily controlled may be in for disappointment, as the government will inevitably tighten limits when prices rise too much. Beijing should instead  ramp up secure options for investors, such as accelerating the offering of real estate investment trusts. Recent gains in mainland real estate prices have all the hallmarks of so-called revenge spending for big purchases after lockdowns eased. Prices rose in May at the fastest pace in seven months, and analysts think June will be even better. Sales by the 16 developers Bloomberg Intelligence tracks rose an average 13% in June versus a year earlier. It might look like a splurge, yet there are signs that these gains will be sustainable, even if capped by government policy that discourages speculation in favor of habitation. Expect selective rises where people feel their money is safe, like big tier-one cities such as Shanghai and Beijing, as well as Guangzhou and Shenzhen, part of the government-promoted Greater Bay Area that encompasses Hong Kong and Macau. There’s certainly a desire to scratch the spending itch. Much of China’s economy was shut in the spring as the government, keen to stop Covid-19 from spreading, halted land sales to developers and purchases of homes. Now developers have come back in with huge discounts. But there are deeper factors at play that should keep lifting prices.First, since the coronavirus hit, the government has been easing credit. Mortgage rates are at 33-month lows, with the average for a first-time home buyer at 5.28%. Many shut out from an increasingly unaffordable housing market are taking advantage, as are investors keen for something safer than volatile stocks.Second, the government is creating demand in some cities, loosening residency rules to encourage people to move in from rural areas. The theory is that a larger urban class boosts consumption — though what it has really lifted is buying homes. The reform of local residency permits includes easing access to these “hukou” for anyone with tertiary education in cities like Hangzhou, where Alibaba Group Holding Ltd. is based.  The city of 10 million people added 554,000 residents last year, the biggest increase in permanent population of any city in China.Martin Wong, Greater China associate director at Knight Frank LLP  forecasts that home prices will rise between 2% and 3% this year in the first-tier cities, and between 3% and 5% in the Greater Bay Area cities. In contrast, urban areas not benefiting from hukou relaxation or lacking the kind of government-infrastructure spending drive to offset the pandemic’s economic impact should see prices stay flat or rise just around 2%, he says. In May, Shanghai, Beijing, Guangzhou and Shenzhen saw new home prices increase more than 1% for the second month in a row. The last time the tier-one cities experienced gains of this magnitude was in late 2016; since then, much of the climb in property prices has been in smaller cities that have fewer restrictions on buying for investment. Older homes rose around 0.6%, beating gains elsewhere. In China, unlike most countries, local authorities cap prices on the sale of new homes, so they can actually be cheaper than older ones.Still, these small percentages show that China is in no mood to allow a big housing boom, even though real estate spending and all its attendant construction and furnishings account for a quarter of the economy. Funding remains tight for developers. As an example, the one-year-loan prime rate is down 40 basis points to 3.85% since last August, but the five-year-loan prime rate on which mortgages are based has fallen just 20 basis points to 4.65%. Developers who want to build housing can only issue new onshore or offshore bonds to finance repaying existing bonds expiring in 12 months, according to Nomura Holdings Inc. analysts, and need approval for offshore loans. No wonder there’s a long queue spinning off their real-estate management arms — which tend to have better steady cash flow — for Hong Kong listings. One solution that would ease the debt burden on developers while giving investors safer diversification is to expand a real estate investment trust trial that China kicked off in April. It has been focused on pooling capital to fund infrastructure such as highways and airports — perhaps no surprise, as this could give the economy a faster boost. But at some point, why not include real estate, both commercial and residential? That would let Chinese families, who have around 70% of their wealth tied up in property — more than double the U.S. — invest in their favorite asset and still diversify into stocks. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • China’s JPMorgan Isn’t Coming Anytime Soon
    Bloomberg

    China’s JPMorgan Isn’t Coming Anytime Soon

    (Bloomberg Opinion) -- China is attempting to create its own JPMorgan Chase & Co. The ambitions could prove hard to satisfy.Regulatory authorities may allow some of the largest commercial lenders into the brokerage industry to perform services that include investment banking, underwriting initial public offerings, retail brokering, and proprietary trading, local media outlet Caixin reported. With capital markets flailing and direct financing struggling to take hold as debt rises across the economy, what better way than to bring in its trillion-dollar whales to boost the financial sector?There is logic to this. Size matters, and the volumes could lead to success. China’s banks have more than $40 trillion in assets; the securities industry’s amount to around 3% of that. The largest lender, Industrial & Commercial Bank of China Ltd., had 32.1 trillion yuan ($4.5 trillion) in assets and 650 million retail customers as of March, according to Goldman Sachs Group Inc. The biggest broker, CITIC Securities Co., had 922 billion yuan and 8.7 million retail clients. Banks have thousands of branches with deeper distribution channels.But banks are the load-bearing pillars of China’s financial system. Regulators have asked lenders to show leniency with hard-up borrowers and to forego profits in the name of national service, in both tough and normal times. Granting brokerage licenses could help them create another channel of (small) profits.Banks stepping in where brokers have failed could help the broader capital markets. In theory, commercial lenders know how to deal with different types of risk, like with the ups and downs in the value of a security and market movements. They’re already big participants in bond markets and have access. Bringing banks into mainstream brokering could help reduce the intensity of risk associated with the trillions of dollars of credit being created in China every month. It may also help solve a persistent problem: the inefficient allocation of credit that has led to mispriced assets.All of this is contingent upon the banks pulling their weight. Going by past experiments, they haven’t brought the heft that Beijing had hoped. Consider China’s life insurance industry. It took bank-backed players in this sector a decade to build a foothold. Their market share grew to 9.2% last year from 2.5% in 2010. The brokerage arms of Chinese banks in Hong Kong have fared little better. Bank of China International Securities, set up in 2002 by Bank of China Ltd., remains a mid-size broker by assets and revenue, Goldman Sachs says. Top executives come from the bank; related-party transactions with the parent account for just about 14% for underwriting business and around 39% for income from asset management fees.Catapulting ICBC to the same stature as JPMorgan — a full service bank with a 200-year history — may take a while. The American financial giant has hired big, and opportunistically built out businesses. It bought and merged with firms like Banc One Corp. and Bear Stearns Cos. and is in consumer banking, prime brokerage and cash clearing. The services it offers run the gamut of credit cards, retail branches, investment banking, and asset management. Shareholders have mostly rewarded the efforts.For China’s biggest lenders, conflicting and competing priorities will make this challenging. They’re already being required to take on more balance sheet risk, lend to weak companies and roll over loans while maintaining capital buffers, keeping depositors happy and essentially martyring themselves. Now, they’ll be adding brokering at a time when traditional revenue sources are shrinking in that business. And it won’t happen overnight, or even in the next two years. As for brokers? Their stock prices dropped on the news that banks would be wading into their territory.Beijing’s efforts to shore up its capital markets may look OK on paper, but they’re increasingly muddled and interests aren’t aligned. As China attempts to make its financial sector more institutional and less fragmented while it’s also letting in foreign banks and brokers, allowing the big homegrown institutions to do more, with additional leeway, doesn’t necessarily make for a stronger system. As I’ve written, experiments like these can have unexpected results.Over time, it won’t be surprising to see China’s large brokers and banks start looking very similar; for instance, big securities firms becoming bank holding-type companies, as one investor suggested. That may be a laudable goal for Beijing, but is it realistic? And does it take into account the problems on the financing side, such as misallocation and transmission? Ultimately, none of this really gets at one big problem: unproductive credit.All the while, regulators are inviting in the likes of the actual JPMorgan Chase and Nomura Holdings Inc. and giving them bigger roles. China won’t be ready. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Nomura (NMR) Launches Institutional-Grade Custody Platform
    Zacks

    Nomura (NMR) Launches Institutional-Grade Custody Platform

    Nomura (NMR) launches a secure and compliant digital asset custodian for institutional investors along with its crypto-partners, CoinShares and Ledger.

  • Bloomberg

    Tencent Buying iQiyi Smells a Lot Like That Uber Deal

    (Bloomberg Opinion) -- The idea of Tencent Holdings Ltd. buying a stake in Chinese video service iQiyi Inc. looks good on paper. Their current rivalry in the content-streaming market undercuts both companies, depressing their earnings.In reality, though, a tie-up between the social media giant and the subsidiary of Baidu Inc. is more likely to look like Didi Chuxing’s buyout of rival Uber Technologies Inc.’s China division. A short-term detente may turn in to an opportunity for other players,  which would leave the merged entity back at square one, facing fresh competition.Tencent has approached Baidu about purchasing shares in iQiyi in a deal that would displace the search-engine provider as its biggest shareholder, Reuters reported Tuesday, citing sources it didn’t identify. That would be a big deal, literally, given that Baidu owned 56.2% of the Nasdaq-listed company as of mid-February.IQiyi and Tencent Video are currently the largest long-form video providers in China (as opposed to short form, such as Douyin/TikTok), with around 500 million monthly active users apiece. Alibaba Group Holding Ltd.’s Youku trails with 324 million, Credit Suisse Group AG notes, citing data from researcher QuestMobile.That means there would definitely be synergies if iQiyi and Tencent Video hooked up, notably on content costs, Credit Suisse analysts Tina Long and Ashley Wu wrote. More importantly, iQiyi’s debt and cash burn mean it needs new capital by no later than next quarter, the bank notes.Significantly, there’s a large amount of customer crossover, with about half of each service’s audience using the other, Nomura Holdings Inc. wrote, again citing QuestMobile. Nomura’s skepticism is warranted: After rivals Youku and Tudou merged (now simply called Youku and since acquired by Alibaba), the popularity of the Tudou platform dropped, likely due to overlap. This brings to mind the exit of ride-hailing service Uber Technologies Inc. from China in 2016. The American company’s local business was bought out by Didi in what was widely seen as a win for the Chinese player. The expectation was for market consolidation and a steady flow of profits. Uber left the country with a 20% share in Didi, which is now one of the world’s largest unicorns by value. The move allowed the U.S. firm to stop bleeding money while enjoying the upside of owning a stake in the business it surrendered to.Fast forward, though, and Didi is still struggling to get real pricing power — the key to boosting profitability. On a few occasions, it’s tried to raise prices in a city, only to have rival Meituan Dianping decide to open up ride-hailing there, forcing fares back down.This’s likely what would happen to a Tencent Video consolidation with iQiyi. They could merge their services completely, allowing deep cuts in content costs yet still taking a hit on subscription numbers. Or, they could divide and conquer (one covers sports and animation, the other drama and variety), but that would require almost as much video to be produced to keep the combined user base. Or, services could be bundled with a discount to users taking both; that would entail a loss of revenue.Even if the companies manage to pull off the technical, management and financial aspects of a merger, they still might not be able to control the market enough to assert power in the long term.The remaining entity would not only be competing with Alibaba’s Youku. It would also be squaring off against any provider of content that grabs the attention of consumers. Bytedance Inc.’s Douyin (the domestic version of TikTok) is gaining traction, while Tencent’s own gaming titles continue to eat up user time. Then there’s the very real possibility that a new entrant would come along and start things up all over again.Both Tencent and iQiyi might win the video-streaming battle by calling a truce with each other, but remember that the real winner of China’s taxi wars was the one that’s no longer in the fight. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Alibaba and ByteDance Expand in Hong Kong as Banks Pull Back
    Bloomberg

    Alibaba and ByteDance Expand in Hong Kong as Banks Pull Back

    (Bloomberg) -- Chinese tech firms are expanding their footprint in Hong Kong even as the pandemic prompts some banks to consider scaling back in the world’s most expensive office market.TikTok owner ByteDance Ltd. and Alibaba Group Holding Ltd. have signed leases to add office space in Hong Kong, according to people familiar with the matter who asked not to be identified as the matter is private.ByteDance took out a three-year lease on about 3,000 square feet (279 square meters) of space in Causeway Bay’s Times Square, according to a person familiar. Alibaba has also signed up for one more floor spanning approximately 17,000 square feet in the same building, one of the people said. The firm currently leases three floors and a dozen more units.Representatives for ByteDance and Alibaba declined to comment.The new leases underscore the twin tech giants’ ambition to broaden their global footprint, as growth in their home market slows. While ByteDance is looking for the next global hit to replicate TikTok’s success in online entertainment, Alibaba’s divisions including e-commerce and cloud computing are tapping overseas clients and customers.Bytedance’s valuation has surged to more than $100 billion in recent private share transactions, as investor confidence in the popular TikTok video platform grows. The company previously laid out an aggressive expansion plan of providing 40,000 new jobs in 2020. Those include two Hong Kong-based positions for crafting content policies, according to ByteDance’s job referral site.Bank OfficesThe expansion of the Chinese tech giants comes as some financial firms reassess their office needs with so many staff working from home. The city is also mired in its deepest recession on record, and faces growing tension over a new security law proposed by China.In March, Nomura Holdings Inc. said it will cut its space in Two International Finance Centre when a new lease takes effect at the start of 2021. Macquarie Group Ltd. is handing back space in One International Finance Centre that the Australian investment bank had sublet to a co-working provider.As companies look to cut costs, demand for office space has declined. The average vacancy rate across the city’s major business areas rose to 7.2% in April, the highest since October 2009, according to Jones Lang LaSalle Inc. Meanwhile, rents dropped 3% in April from March, the property agency said.Hong Kong’s Central district has the world’s highest rents for office space, averaging $313 per square foot, topping New York’s Midtown and London’s West End, data from JLL show.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Nomura's New CEO to Boost Growth With Focus on Private Markets
    Zacks

    Nomura's New CEO to Boost Growth With Focus on Private Markets

    Nomura's (NMR) business strategy involves investments in private businesses and digitization in order to improve the company's prospects.

  • Nomura Holdings, Inc. (NMR) Q4 2020 Earnings Call Transcript
    Motley Fool

    Nomura Holdings, Inc. (NMR) Q4 2020 Earnings Call Transcript

    Good day everyone and welcome to today's Nomura Holdings Fourth Quarter and Full-Year Operating Results for Fiscal Year Ended March 2020 Conference Call. This slide outlines some of the initiatives we have undertaken to help our employees, clients and communities.

  • Goldman (GS) Mulls to Offer Loans in Partnership With Amazon
    Zacks

    Goldman (GS) Mulls to Offer Loans in Partnership With Amazon

    Goldman Sachs (GS) might offer loans to small businesses through Amazon's lending platform.

  • Goldman Sachs (GS) on Hiring Spree, to Add 600 Jobs in China
    Zacks

    Goldman Sachs (GS) on Hiring Spree, to Add 600 Jobs in China

    In sync with Goldman Sachs' (GS) efforts to gain majority control in the joint venture and improve profitability, the bank announces plans to increase workforce in China.

  • BlackRock (BLK) to Expand in China With Majority Owned JV
    Zacks

    BlackRock (BLK) to Expand in China With Majority Owned JV

    BlackRock's (BLK) efforts to expand in China will help diversification, and lead to further top-line growth.

  • JPMorgan to Set up Majority-Owned Joint Venture in China
    Zacks

    JPMorgan to Set up Majority-Owned Joint Venture in China

    JPMorgan (JPM) receives final approval from regulators to set up a majority-owned securities joint venture in China.

  • Huntington Plans to Shutter Branches in Giant Eagle Stores
    Zacks

    Huntington Plans to Shutter Branches in Giant Eagle Stores

    In order to consolidate branch footprint, Huntington Bancshares (HBAN) plans to cut down number of branches by 30 in Giant Eagle Stores.

  • Nomura to Acquire Greentech Capital Advisors, Stock Down
    Zacks

    Nomura to Acquire Greentech Capital Advisors, Stock Down

    With an aim to enhance its global footprint, Japan-based Nomura (NMR) agreed to acquire Greentech Capital Advisors.

  • Royal Bank of Scotland Launches Bo to Boost Digital Banking
    Zacks

    Royal Bank of Scotland Launches Bo to Boost Digital Banking

    Royal Bank of Scotland (RBS) officially launches the stand-alone digital banking platform, Bo.

  • TD Ameritrade Rides on Inorganic Growth Efforts, Costs Rise
    Zacks

    TD Ameritrade Rides on Inorganic Growth Efforts, Costs Rise

    TD Ameritrade (AMTD) appears to be a promising bet riding on robust prospects and long-term growth opportunities. However, expenses witness a rise.

  • T. Rowe Wins Preliminary Approval for Semi-Transparent ETFs
    Zacks

    T. Rowe Wins Preliminary Approval for Semi-Transparent ETFs

    Following the approval, T. Rowe Price (TROW) will be able to offer active strategies without the need to disclose certain information that might be harmful to the interests of fund shareholders.

  • HSBC, Royal Bank of Scotland Plan to Enhance Digital Banking
    Zacks

    HSBC, Royal Bank of Scotland Plan to Enhance Digital Banking

    HSBC and Royal Bank of Scotland (RBS) are set to launch respective new digital banking platforms.

  • Goldman Plans to Provide Outlook for Metrics in January
    Zacks

    Goldman Plans to Provide Outlook for Metrics in January

    Goldman's (GS) plan to increase transparency will help the company gain investors' confidence.