Haitong Securities Co., Ltd. (SHSE:600837, Financial) is a leading securities and brokerage firm in China. Shares were weak during the first quarter due to macro concerns over rising non-performing loans in the Chinese banking system, which could lead to a more pronounced credit contraction. We believe Haitong is well-positioned to gain for many years as credit allocation in China undergoes a secular shift from a state-bank sponsored system driven by political relationships to a more market-driven and credit sensitive system increasingly administered by the securities industry.
From Baron Funds' first quarter 2014 commentary.
