Profits at China’s biggest brokers from Citic to Haitong are shaved by dwindling trades

Profits among the country’s top five brokers shrank by between 6.5 per cent and 75 per cent during the first six months

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An investor at a securities brokerage house in Beijing on 2 August 2019. Contrary to global practice, China’s stock exchanges use the green colour to denote declines and losses, red to represent gains and profits. Photo: EPA-EFE

Published: 2:45pm, 30 Aug 2024

China’s biggest stockbrokers have reported significant declines in their first-half earnings, as regulators’ drastic measures failed to kick life back into the nation’s US$8 trillion capital market.

Profits among the country’s top five brokers shrank by between 6.5 per cent and 75 per cent during the first six months, compared with last year, according to the Post’s analysis of their interim results. Citic Securities, the most valuable broker and owner of CLSA Securities, was the best performer, while Haitong Securities had the biggest decline, the analysis showed.

“That is mainly due to the decrease in market activity,” said Haitong’s Shanghai analyst Sun Ting, who estimated that industry-wide profit had fallen by 24 per cent during the period. “The equity market is in the doldrums, and there are sharp declines in fundraising and the outstanding values of margin trading and short selling.”

Revenue from investment banking and broking business took a severe beating from the regulatory tightening of approvals of initial public offerings (IPOs) and the crackdown on short selling, measures being implemented aimed to shore up sentiment through curbs on new stock supply and selling. The values of new stock offerings on the mainland’s exchanges slumped 85 per cent from a year ago in the first half, while average daily turnovers shrank by almost 7 per cent, according to Citic Securities.

The weak results underscore how the yearlong slump in China’s capital market is translating into crimped earnings for the entire 12 trillion yuan (US$1.69 trillion) brokerage industry. The industry is already reeling from sector-wide pay cuts for its employees and even salary clawbacks amid the government’s crackdown on hedonism and extravagance among financial workers.

China’s benchmark CSI 300 Index dropped 3.7 per cent in the first half, as investors’ confidence waned again after a rebound earlier in the year triggered by state buying and the government’s initiative to boost the quality and dividend payouts among listed companies.

Profits at China’s biggest brokers from Citic to Haitong are shaved by dwindling trades

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Profits among the country’s top five brokers shrank by between 6.5 per cent and 75 per cent during the first six months

Profits among the country’s top five brokers shrank by between 6.5 per cent and 75 per cent during the first six months