Across The Border | Demand for brokerage licences soars as mainland stocks seen recovering

Demand for brokerage licences in China has soared to an eight-year high as investors shrug off weak market sentiment and vie for a share of the mainland securities industry.

According to the China Securities Regulatory Commission (CSRC), 16 applicants are currently waiting to see if their submissions for a brokerage licence are approved. That’s the highest number of applicants since 2008, and may increase in the coming months as confidence returns to the market, analysts said.

The frenzy of applications for new licences comes despite a sharp fall in first-half earnings in the brokerage sector amid investors’ lack of confidence in the stock market.

But analysts said investors had good reason to bet on the long-term health of the securities sector since Beijing would continue to play up the vital role of the capital market in its economic reforms.

The current leadership hopes more companies will raise funds from the stock market, rather than borrowing money from banks to replenish their growth.

“The outlook for the securities industry remains bullish,” said Tang Shengbo, a Nomura analyst. “The woeful performance in the first half of this year was due to a weak market performance, but it was a short-term turbulence.”