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QINGDAO TODAY
在线翻译:
szdaily -> Markets -> 
Small brokerage companies face tough 2019
    2018-12-25  08:53    Shenzhen Daily

SMALL brokerage firms in China face a grim 2019.

After a year when as much as US$2.9 trillion was wiped from equities traded on the domestic stock exchanges, securities companies without scale will struggle to survive, market watchers say. Even government policies aimed at supporting stocks will tend to favor larger players, who stand to gain from more business opportunities coming their way.

The nation’s top five brokers handled about 56 percent of all equity, equity-linked and rights offerings in 2018. That’s the biggest market share the companies have taken since 2009.

“The rising concentration in the brokerage industry will become a trend in the next three to five years, and may result in an industry-wide reshuffle,” said Zhu Zhenxin, a Beijing-based analyst at Reality Institute of Advanced Finance.

“We’re likely to see some mergers and acquisitions, as well as changes of ownership among brokerages,” Zhu said.

China has about 130 securities firms, but only around 28 percent are publicly traded. All the top five equity underwriters are listed.

CICC said in a research note earlier this month that the combined net profit of the 28 companies it tracks dropped 27 percent from January through November from a year earlier.

Investors aren’t impressed, sending a gauge that tracks brokers down 29 percent this year versus a 23 percent decline in the Shanghai Composite Index.

A pledge by President Xi Jinping in October to shore up the economy and offer support to the private sector gave shares a much-needed fillip, and the government has also outlined plans to set up a new trading venue for tech stocks plus allow more frequent refinancing by listed firms.

But those initiatives will mainly provide business opportunities for the larger companies.

For smaller brokerages, the key will be to offer tailored investment advice and a more personalized service, according to Zhu Guan, an analyst at Cinda Securities Co. in Beijing.

(SD-Agencies)

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