China’s brokerage department saw the big McGell, but it’s still competitive and diversified
China’s 12 trillion ($1.6 trillion) brokerage division will continue to remain diversified and competitive despite Beijing’s request for continued mergers of world-class entities.
“The landscape will not change much in the next two years,” the rating agency said in a report on Friday. “Top players will gain more market share, but the industry may remain diversified and competitive.”
The company said China’s securities division, which has more than 140 companies, faces fierce competition in pricing, service and underwriting standards, prompting repeated regulatory warnings. “Aggressive underwriting can increase the risk of securities companies.”
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Recently, the Yuan-owned newspaper Securities Times reported that some Chinese investment banks had fees as low as 0.01% to boost their sponsors and underwriting stakes in Hong Kong’s contemporary Ampere Technology company or CATL, the world’s largest electric vehicle (EV) battery maker. CATL is said to seek at least $5 billion from its secondary listing.
The China Securities Regulatory Commission punished several shortcomings of Zheshang Securities in November. Photo: Reuters ALT = China Securities Regulatory Commission punished several shortcomings of Zheshang Securities in November. Photo: Reuters>
The China Securities Regulatory Commission’s supervision bureau in eastern Qianjiang Province imposed penalties on Zheshang Securities in November for lack of sufficient independence in some sponsorship work and charges fees below industry standards.
In March 2024, CSRC released guidance to restructure the industry to enhance its competitiveness and build a world-class investment bank by 2035.
Since then, at least six merger plans have been made. Late last year, Junan Securities and Haitong Securities announced a 1003 billion yuan merger to create China’s largest brokerage.
Last Friday, Chinese media reported that the new entity would be named Guotai Haitong.
Last month, Reuters reported that state-owned international capital will merge with China Galaxy Securities, both companies rejected.
According to S&P estimates, as of the end of June 2024, transactions announced since the end of 2023 account for 20% of the industry’s total assets.
