By South China Morning Post | Created at 2024-12-30 23:31:18 | Updated at 2025-01-02 21:41:29
2 days ago
Consolidation in China’s 12 trillion yuan (US$1.6 trillion) brokerage sector is expected to accelerate next year, as more industry players answer Beijing’s call to create world-class investment banks that can rival global giants like Goldman Sachs and Morgan Stanley.
More high-profile, government-led deals are likely to emerge in 2025 following the megamerger of Guotai Junan Securities and Haitong Securities, which is expected to create the industry’s largest firm by assets, according to analysts. Brokerages that have state-backed shareholders in common are more likely to be paired up, they say.
Shanghai, home to China’s largest stock market, has signalled it will do more to help cultivate two to three investment banks that can compete on the global stage by 2035. In a three-year plan, unveiled earlier this month to support asset revamps of the city’s listed companies, Shanghai highlighted the need to expedite brokerage mergers to construct top-tier investment banks.
“The consolidation in the brokerage industry is accelerating,” said Xu Yingying, an analyst at Caitong Securities. “The policy direction is crystal clear: boosting competitiveness by mergers and acquisitions as well as an optimisation of the allocations of state-owned financial assets.”
The initiative to nurture home-grown, world-class investment banks was first mooted by China Securities Regulatory Commission chairman Wu Qing as part of the package to arrest a decline in the stock market. The objective was subsequently endorsed in a high-level guideline document issued by the State Council this year, which called for a restructuring of the industry to sharpen competitiveness.
At least six merger plans have been rolled out since then. Aside from the Guotai Junan-Haitong tie-up – valued at about 100 billion yuan – Zheshang Securities bid for a 15 per cent stake in Guodu Securities and Guolian Securities unveiled a plan to buy out Minsheng Securities.
