Beijing will soon issue provisional rules to allow domestic brokerages to tap the debt market for funds, state media reported yesterday. The news was meant to ease investor concerns about an inundation of stock offers by securities firms after Citic Securities set the first initial public offering in motion this week, and as financial firms braced themselves for looming full foreign competition. 'This is to suggest that other brokerages can issue bonds, and . . . to dispel fear that stock listings are the only means for brokerages to raise funds,' said a Shenzhen-based analyst with China Southern Securities. Both are also seen as Beijing's show of support to domestic brokerages as a protracted stock market slump erodes bottom-lines. Brokerages have so far been shut out of China's tiny corporate debt market, which has been reserved only for large state-owned firms in the 18 years since its inception. Beijing's new rules would clear the way for brokerages to issue one- to five-year bonds to the public or to qualified institutional investors, said the Shenzhen-based Securities Times yesterday, quoting unnamed sources. Bonds issued to the public could trade on the stock exchanges. The China Securities Regulatory Commission (CSRC) was previously reported to be considering rules to enable multi-service brokerages - those licensed for share and bond broking, underwriting, investment consulting and proprietary trading at the same time - to issue bonds. Under China's company law, brokerages could issue debt up to 40 per cent of their net asset value but must have enough net profits in the past three years to service one-year's interest payment, the Shenzhen paper said. Less than 20 of the mainland's 124 brokerages would fit the bill, the analyst estimated. China's mostly small brokerages are in dire need of funds to finance their growth as Beijing phases in foreign competition in its long-shielded financial industry. Chinese securities firms had combined paid-in capital of US$12.6 billion by October, just three times the paid-up capital Merrill Lynch had at its disposal last year, Reuters said. Meanwhile, policy uncertainties, a flood of listings and a crackdown on securities frauds had helped wipe 38 per cent off mainland share prices since the middle of last year. Citic Securities - under the Citic financial holdings company - warned in its prospectus of 'dramatic falls in [this year's] operating revenue and net profit over [last year].' The majority of Chinese brokerages, which rely on brokerage and proprietary trading for 70 to 80 per cent of their revenue, are expected to post losses this year, with their woes aggravated by falling commission rates.