Chinese Brokerages Could Gain From Country's Steps to Support Market — Market Talk

Chinese brokerages are likely to be key beneficiaries of the country's measures to support its stock market, Citi analysts say in a note. A regulator speech on Saturday indicated policy direction to build first-class investment banks through sector consolidation and relax capital requirement for selective brokerages, the analysts note. The ongoing support also ties in with guidelines for mutual fund companies to boost their funds' long-term performance, as well as policies encouraging insurers to invest more long-term funds into the A-share market, Citi adds. Chinese brokerages with high leverage ratios such as China International Capital Corp., Citic Securities and Orient Securities are likely to benefit most, they say. They expect further upside to Chinese brokerages' return on equity, which could drive share prices higher. (megan.cheah@wsj.com)

By Megan Cheah

China International Capital Corp. is planning to acquire Cinda Securities and Dongxing Securities in a move that could create a market-leading brokerage and further efforts to consolidate China's financial-services sector.

State-owned investment bank CICC wants to merge with the two smaller brokerages through a share-exchange agreement, CICC said Thursday. Cinda and Dongxing shareholders will receive newly-issued CICC shares listed in Shanghai.

Details of the agreement and pricing weren't disclosed.

Trading in CICC's Hong Kong and Shanghai shares were halted before the markets opened. Cinda and Dongxing's stocks were also suspended from trading.

Chinese authorities have been pushing for mergers in a sector that has seen sluggish deal activity and low business confidence since the pandemic.

The China Securities Regulatory Commission in March last year said it aimed to help 10 securities firms lead the industry within the next five years and hoped to build two to three brokerages that will have a global impact by 2035.

One of the biggest mergers in the space was a share-swap between Shanghai-based firms Guotai Junan Securities and Haitong Securities last year, which created an entity with 1.619 trillion yuan in assets, equivalent to $227.66 billion.

The three-way merger of the Beijing-based companies could create a "giant broker with a market-leading position", said Citi analysts Judy Zhang and Calvin Leung in a note.

The merged entity could rise to be the third largest among Chinese brokerages by revenue and fourth by assets on a pro-forma basis, based on Citi's calculations.

The deal will likely let CICC replenish capital and catch up with peers in terms of scale, they added.

While the transaction could be dilutive for CICC's Shanghai shareholders, the analysts still expect share prices of CICC and the wider Chinese broker sector to react upwards to the news.

"It indicates an acceleration of supply-side reform among China brokers, which could help fee rates to stabilize and improve brokers' return on equity over time," Zhang and Leung added.

Write to Megan Cheah at megan.cheah@wsj.com

                                Close      Prior     Change   % Change 
                                -----      -----     ------   -------- 
 Air China A                     8.73       8.73      -0.06      -0.68 
 Anhui Conch Cement A           23.71      23.71      +0.12      +0.51 
 Bank of China                   5.68       5.68      +0.02      +0.35 
 Baoshan Iron & Steel A          7.64       7.64      +0.03      +0.39 
 Bright Dairy & Food A           8.72       8.72      +0.19      +2.23 
 China Eastern Airlines A        5.29       5.29      +0.03      +0.57 
 China Merchants Bank           42.96      42.96      +0.24      +0.56 
 China Minsheng Banking A        4.04       4.04       unch       unch 
 Chn Petro & Chem Sinopec        5.67       5.67      +0.01      +0.18 
 China Southern Airlines         7.29       7.29      +0.05      +0.69 
 China United Ntwk Comms         5.50       5.50      -0.03      -0.54 
 China Yangtze Power A          28.62      28.62      +0.09      +0.32 
 Chongqing Brewery A            54.35      54.35      +0.35      +0.65 
 CITIC Securities A             29.06      29.06      -0.24      -0.82 
 COSCO SHIPPING Engy A          12.41      12.41       unch       unch 
 COSCO SHIPPING Special A        7.49       7.49      +0.08      +1.08 
 Daqin Railway                   5.73       5.73      -0.01      -0.17 
 Dongfeng Automobile A           7.85       7.85      +0.08      +1.03 
 Fujian Yanjing Huiquan         12.06      12.06      +0.09      +0.75 
 Haier Smart Home A             26.88      26.88      -0.22      -0.81 
 Hainan Airlines Hldg A          1.83       1.83      -0.01      -0.54 
 Hisense Visual Tech A          25.50      25.50      +0.02      +0.08 
 Hua Xia Bank A                  6.99       6.99       unch       unch 
 Huadian Power Intl              5.47       5.47      -0.07      -1.26 
 Huaneng Pwr Intl                8.19       8.19      -0.08      -0.97 
 INESA Intelligent Tech A       19.19      19.19      -0.08      -0.42 
 Jiangsu Expressway A           13.81      13.81      -0.09      -0.65 
 Jiangxi Copper A               39.27      39.27      -0.98      -2.43 
 Lucky Film A                    7.78       7.78      +0.06      +0.78 
 Maanshan Iron & Steel A         4.37       4.37      +0.34      +8.44 
 Nanjing Iron & Steel A          5.49       5.49      +0.01      +0.18 
 SAIC Motor A                   15.90      15.90      -0.18      -1.12 
 Shandong Gold-Mining A         36.10      36.10      -0.31      -0.85 
 Shanghai Bailian Group A        9.26       9.26      +0.09      +0.98 
 Shanghai Pudong Dev Bank       11.67      11.67      -0.02      -0.17 
 Shanghai Xinhua Media A         6.89       6.89      -0.04      -0.58 
 Shenyang Jinbei Auto A          5.00       5.00      +0.05      +1.01 
 Sichuan Changhong Elec A       10.04      10.04      -0.11      -1.08 
 SINOPEC Oilfield Svc A          2.35       2.35      +0.02      +0.86 
 SINOPEC Shanghai PetroChm       2.83       2.83      +0.01      +0.35 
 Tsingtao Brewery A             66.16      66.16       unch       unch 
 Yankuang Energy Group A        15.16      15.16      -0.57      -3.62 
 Zhongjin Gold A                21.41      21.41      -0.06      -0.28 
 
Source: FactSet 

Operating revenue and profit attributable to shareholders surged over 50% and 129% year-over-year, respectively, driven by strong fee, commission, and investment income. Key financial ratios improved, and cash flow from operations more than doubled.

Original document: China International Capital Corp. Ltd. Class A [601995] Earnings Release — Oct. 29 2025

Q3 2025 saw robust revenue and net profit growth, driven by strong performance in brokerage, investment banking, and asset management. Key financial ratios improved, and the company expanded its branch network while addressing regulatory issues.

Original document: CITIC Securities Co. Ltd. Class A [600030] Interim report — Oct. 24 2025

Activity in China's capital market could rise, thanks to Beijing's emphasis on tech and innovation in its next five-year plan, Morgan Stanley analysts say in a research note. The analysts think that China's capital markets could be key to supporting tech innovation by providing funds and building a market-oriented environment for risk and reward. Fundraising in mainland markets could pick up from a very low base, after regulators signaled that the pace of IPOs normalized around mid year, they say, adding that Chinese regulators could focus on deal quality. Chinese brokers CICC and Citic Securities could strengthen their position in the IPO market, given their edge in client base and underwriting capabilities, they add. (sherry.qin@wsj.com)