China securities industry braces for influx of foreign competition
- Consolidation expected as domestic securities firms are encouraged to scare away overseas wolves by ‘becoming tigers’
- But profitability of foreign firms in China is not assured given tough competition
Chinese securities firms are racing to prepare themselves for an influx of foreign competitors, as Beijing opens up the domestic market to help resolve the trade war with the United States.
With many brokerages suffering shrinking revenues at home, a new round of consolidation in the domestic industry is expected next year to enable them to better compete with experienced foreign firms.
Citic Securities, the country’s largest securities firm in terms of both assets and profits, stirred the industry on Tuesday by announcing its attempt to take over loss-making Guangzhou Securities.
The deal came just a day after UBS Securities finished raising its stake in its Chinese joint venture to 51 per cent, although there is no direct link between the two.
China allows UBS to take controlling stake in local securities firm
The Citic takeover bid came as Beijing is speeding up the process of opening the financial market to foreign competition – JPMorgan and Nomura have followed UBS in applying to take controlling stakes in local joint ventures.