NewWhy only ‘idiots’ are buying Citic Securities; Analysts flag broker’s shares as offering good value

Despite management turmoil and a credit rating downgrade, Citic Securities may offer an attractive opportunity for investors, as a low valuation and strong business fundamentals support a recovery in the stock price going forward, according to analysts.

China’s largest securities firm has seen close to a dozen executives detained or arrested since August, including its general manager Chen Boming, as China widens its probe into insider trading on the heels of the stock market crash this summer.

Rating agency Standard & Poor’s on Tuesday lowered Citic Securities’ long-term issuer credit rating to “BBB” from “BBB+” and said it would monitor the company for further downgrades in the future. The ratings agency cited the “unexpected management reshuffle” and “heightened industry risk” as concerns.

Shares of Citic have tumbled 45 per cent in Shanghai and 40 per cent in Hong Kong so far this year.

However, some analysts said the sell-off may have created a good opportunity for brave investors.