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Daniel Ren

Changjiang Securities, the first mainland-listed brokerage to publish third-quarter earnings, has posted a quarterly loss of 85 million yuan (HK$103.6 million) as a result of losses in proprietary trading.
The Shenzhen-listed company's loss between July and September contrasts with a net profit of 453 million yuan in the same period a year ago.
Changjiang  lost 210 million yuan from share trading in its own account, falling victim to a 14.6 per cent drop in the key Shanghai stock index in the third quarter.
Its poor results added to the bearish outlook in the market as brokerages, among the most profitable listed companies, could weigh down the market further.
According to the 17 listed brokerages' monthly reports, nine lost money last month. These 17 brokerages lost about 200 million yuan between them, according to data provider Wind Information.
More than half the revenue of securities firms on the mainland is derived from brokerage fees. The sluggish market this year has already dented their sales and with the market showing no signs of improving, their bottom lines are more likely to come under attack.
Citic Securities, the mainland's largest brokerage, saw sales of just 166 million yuan in September, 11 per cent of the figure in February.
'Brokerages are facing uncertainties, with turnover expected to drop further,' Haitong Securities analyst Dong Le  said in a report. 'Brokerage fees are likely to drop rapidly.'
As of yesterday, the key Shanghai Composite Index had slumped 17.5 per cent this year, following a 14.3 per cent drop in 2010.
Mainland-listed companies reported  slower profit growth in the second quarter  as they posted a 22.8 per cent year-on-year increase, down from 25 per cent in the first quarter. 
For the full year of 2010, the profit growth stood at 38.8 per cent.
Brokerages are tipped to be the main victims of a downward spiral amid weak liquidity because low turnover translates into lower brokerage fee collection, the lifeline of brokerages. 
Changjiang reported third-quarter sales of 242 million yuan, down 77 per cent from a year earlier.
China International Capital  has revised down its earnings forecast on the brokerage, estimating its full-year profit this year would be 45 per cent short of its earlier expectations.
When the key Shanghai index crashed below the psychologically important 2,500-point level in mid-September, analysts predicted the market could bottom out  at around 2,400 points. The gauge closed at 2,313.78 yesterday. Changjiang closed at 9.09 yuan, down 2.8 per cent.
'The index could fall through the 2,300-point level next week,' Shenyin Wanguo Securities analyst Wei Daoke said.  'The market downturn seems irreversible.'
17.5%
The slump in the Shanghai Composite Index so far this year



Big loss at brokers unnerves market