China Merchants Securities has become the first mainland brokerage to open outlets for institutional investors as part of its plan to expand into investment banking businesses.
The three outlets in Beijing, Shanghai, and Shenzhen target pension and mutual fund managers, as well as insurers, trust companies, qualified foreign institutional investors and other major corporates.
Services available at the outlets include investment banking, research analysis, asset management, securities underwriting and trading of large blocks of shares.
'Clients can visit the new outlets to talk to our managers, who have professional expertise,' said Hu Lin from the company's marketing department.
Local brokerages, which have seen their incomes boosted by the country's booming stock markets since the middle of last year, are looking to expand in a bid to strengthen their market positions.
Merchants Securities runs 53 other outlets in 26 cities in the mainland, all catering to the retail investment market.
'A more common way that brokerages choose to expand their corporate finance or investment banking operations is to establish closed-door offices in cities where they already have outlets for retail investors, so that they can share client bases,' said a banker from one securities house.
Merchants Securities posted a net profit of 1.1 billion yuan last year, a 17-fold jump from 2005, thanks largely to a 13-fold jump in proprietary trading and an almost four-fold increase in revenue from commission fees.
The firm earned 110.7 million yuan from underwriting securities last year, more than double that the previous year, while revenue from asset management quadrupled to 267.3 million yuan.
Revenue from securities underwriting and asset management last year accounted for 15.5 per cent of total revenue at Merchants Securities, compared with 18 per cent in 2005.
Gearing for growth
Local brokerages are looking to expand to strengthen their market positions
Last year China Merchants Securities reported a net profit of 1.1b yuan