image

China Economy

Citic Securities net annual profit slumps 48pc, as markets remain volatile

China’s largest securities house by total assets records 10.4 billion yuan profit, while smaller rival CICC reports 6.8pc drop in net profit to 1.8bn yuan

PUBLISHED : Wednesday, 22 March, 2017, 11:37pm
UPDATED : Wednesday, 22 March, 2017, 11:37pm

Citic Securities, China’s largest securities house by total assets, saw net profit for 2016 slump 48 per cent, due to heightened stock market volatily that bit into brokerage incomes.

The bottom line dropped to 10.4 billion yuan (US$1.51 billion), down from 19.8 billion yuan a year earlier – right in line with its preliminary financial data for 2016, revealed on January 19.

Separately, Citic Securities’ smaller rival, China International Capital Corporation (CICC), reported a 6.8 per cent drop in net profit to 1.8 billion yuan for 2016, the second year after its public listing in Hong Kong.

CICC is one of the nation’s oldest investment banks and boasts strong connections with the leadership and top-ranking state-owned enterprises.

Ding Xuedong resigned as its chairman in late February, and was recently promoted as the deputy secretary-general of the State Council, and advisor to the Monetary Policy Committee of the central bank.

CICC floated in Hong Kong in early November in 2015. raising US$811 million.

China’s A-share market is still in the middle of a sluggish recovery from sharp plunges, leading to lower turnover by investors.

In 2017, given the expected interest rate rises in the US, we expect the monetary environment to be ‘neutral’ compared with that of 2016
Analysts at Guotai Junan Securities

The benchmark Shanghai Composite Index stood at 3,103.64 points at the end of 2016, down 12.31 per cent year on year.

Analysts with Guotai Junan Securities expect A-shares to improve within a small range this year, as supply-side reforms, economic deleveraging and state-owned enterprise reforms are projected to continue making systematic economic risk decline further.

“Along with the launch of Shenzhen-Hong Kong Stock Connect, capital markets have opened up further,” they wrote in a note in late February.

“In 2017, given the expected interest rate rises in the US, we expect the monetary environment to be ‘neutral’ compared with that of 2016...we expect A-shares to rally within a small range and the average daily turnover to rebound compared with 2016, again by a small margin.”

Citic Securities topped 125 mainland brokerage houses with 464.1 billion yuan total assets in 2015, while CICC ranked 24th with 63 billion yuan of assets, according to latest data from Securities Association of China.

Additional reporting by Celine Ge

business-article-page