GUOSEN Securities Co.’s shares jumped a daily maximum 44 percent on their trading debut in Shenzhen yesterday, as investors pounced on a relatively cheap stock in a sector analysts expect to rally into 2015.

    Guosen’s listing, China’s largest since 2011, came as fellow brokerages and banks pushed the Shenzhen and Shanghai indices nearly 30 percent higher since a central bank interest rate cut Nov. 21.

    Brokerages have booked strong earnings this year reflecting optimism in the wider equities market, an area the government is pushing as a funding source for cash-strapped local firms.

    “If you look at trading volumes now, it’s huge — and that gives an immediate boost to brokerages’ revenues,” said analyst Zhang Yuehui at Kaiyuan Securities.

    Financial shares often rise after rate cuts because cheaper loans spur lending and spending, boosting bank and brokerage earnings. The longer the rally, the more revenue brokerages earn from facilitating trading transactions.

    CITIC Securities Co., Haitong Securities Co. and China Merchants Securities Co. have all roughly doubled in value since the rate cut. In this climate, CITIC Securities yesterday announced the sale of 1.5 billion shares.

    Brokerage shares have been further buoyed by increased custom thanks to Hong Kong and Shanghai stocks now being traded on each other’s bourse. The resumption of mainland initial public offerings (IPOs) after a year-long hiatus also provided a boost.

    Shares of Shenzhen-based Guosen opened at 7 yuan (US$1.13) yesterday, a maximum of 20 percent over the 5.83 yuan IPO price. The shares then reached 33 percent above IPO price, triggering an half-hour trading halt, after which they hit the daily limit of 8.40 yuan.

    Investment bank BOC International puts Guosen shares’ fair market value at 14 yuan to 21 yuan.

    Analysts said brokerages were likely to fare well in 2015, but that valuations were getting steep. The market rally has seen financial firms’ price-to-earnings ratio — a gauge of a company’s valuation — average as much as 75.87.

    Guosen’s ratio was 22.97 when its IPO price was set nearer the start of the rally, which analysts said was low compared with peers but not uncommon for a new listing in China. (SD-Agencies)