Guotai Junan International, a Chinese brokerage firm, has received approval to trade crypto assets in Hong Kong, prompting a sharp rise in its stock.
Increase in Guotai Junan's Market Capitalization
Guotai Junan International's shares soared nearly 200% over two trading days following its approval to trade cryptocurrencies. The Securities and Futures Commission (SFC) upgraded the company's license, allowing clients to trade digital tokens via a licensed platform. On Wednesday, the stock closed at HK $3.70, up 198% from Tuesday’s HK $1.24. The share price reached HK $7.02 intraday on Thursday before closing at HK $3.54. This two-day move represents a 185% gain from the pre-upgrade level.
Competition Among Chinese Brokerages
Other Chinese brokerages such as China Merchants Securities and Huatai International are also seeking similar license upgrades to offer crypto trading services. This intensifies competition in the Hong Kong market, which maintains a licensing regime for crypto exchanges, while mainland China bans all crypto trading and mining.
Support for Crypto Assets by the Hong Kong Government
The Hong Kong government released a policy statement on Thursday to support the tokenization of real assets and expand its crypto licensing framework. This indicates the government's intention to create a favorable environment for the growth of the crypto ecosystem in the region.
Guotai Junan's approval for cryptocurrency trading and the subsequent rise in its stock highlight the changing landscape of financial services in Hong Kong, with increasing competition among brokerages amidst governmental support for crypto assets.
