Mainland brokerages suffer slump in earnings
Mainland brokerages experienced sharp declines in earnings last year as investors shunned stocks amid a sluggish market.
According to preliminary earnings published by five listed brokerages, their net profits dropped at least 40 per cent as the benchmark indicator lost 21.7 per cent.
Among them, GF Securities, the second-largest mainland-listed brokerage by market value, said its earnings slumped 48.75 per cent to 2.06 billion yuan (HK$2.53 billion).
Sealand Securities said its year-on-year profit drop could hit 86 per cent.
Normally, about two-thirds of mainland securities firms' revenues derive from brokerage fees, benefiting from retail investors' active trading of stocks.
On the mainland, individual investors contribute as much as 80 per cent of overall turnover, spending their years of savings betting on volatile stocks and chasing short-term gains.
But they baulked at equities last year due to the downward spiral of stocks after the market dropped 14.3 per cent in 2010.
A survey of 10,000 retail investors by internet portal Sina showed earlier that more than two-thirds of them lost at least 20 per cent of their investment last year.
Brokers said investors had lost confidence in the market - one of the worst-performing worldwide during the past two years.
Total turnover on the Shanghai and Shenzhen stock exchanges last year dwindled 23 per cent to 41.7 trillion yuan.
The weak buying interest prompted the brokerages to slash trading commissions to attract clients.
Guotai Junan Securities analyst Liang Jing said brokerages had slashed the brokerage fee rate last year by 15 per cent on average.
Analysts said the outlook for this year remains cloudy for brokerages as there are no signs that the market will turn around anytime soon amid worsening corporate earnings.
65.4%
The plunge in the Shanghai Composite Index in 2008. The nation's brokerages reported a 63 per cent earnings drop that year
