Chinese Stock Brokers Line Up for $10.6 Billion in Fresh Capital
China’s securities regulator approved a 15 billion yuan ($2.2 billion) capital increase plan by major brokerage Guosen Securities Co. Ltd., assisting a group that struggled last year as the nation’s domestic stock markets plunged into bear territory.
Last year’s weak market was particularly hard on Guosen and its peers because most rely heavily on fees from trading and other related services, such as investment banking, for much of their revenue. Revenue at the nation’s 131 leading brokerages fell 14.5% to 266.3 billion yuan last year, while profit tumbled 41% to 66.6 billion yuan, according to industry data.
Guosen and at least four other brokerages are looking to increase their capital by a collective 71 billion yuan ($10.6 billion) to bolster their financial positions.
Guosen is typical of the group, reporting that revenue fell 15.9% and profit dropped 25.2% last year. The capital increase plan would mark the company’s first securities-based fundraising since its IPO in 2014. Since then Guosen has dropped from the industry’s seventh largest player based on net assets in 2014 to 10th largest at the middle of last year.
Under the newly approved plan, Guosen would raise as much as 15 billion yuan via private placements with no more than 10 financial institutions, the company said Tuesday in a stock exchange announcement. Guosen said it would put as much as 6 billion yuan into its investment and trading business and 2.5 billion yuan into its capital intermediary business, and use as much as 4 billion yuan to repay debt.
The move makes Guosen the first independent brokerage to receive a green light from the China Securities Regulatory Commission (CSRC) among a group of companies looking to do similar fund-raising. In December, the brokerage arm of China Guangfa Bank was cleared to raise as much as 15 billion yuan.
Meantime, several other brokerages have announced similar plans that are still pending.
CSC Financial Co. Ltd. announced a 13 billion yuan fundraising plan in January, which has been approved by the company’s board. In December 2017 Industrial Securities Co. Ltd. floated a similar proposal to raise as much as 8 billion yuan. It submitted a revised proposal last July but still hasn’t received approval. Haitong Securities announced its own plan to raise 20 billion yuan nearly a year ago but hasn’t disclosed a formal plan yet.
As the industry has struggled, its net return on assets dipped to a several-year low of 3.52% in 2018, down 2.58 percentage points from the previous year. Despite last year’s weakness, the industry’s prospects could improve this year if current market trends continue. The benchmark Shanghai composite index is up more than 25% since the start of this year, putting the market into bull territory.
Contact reporter Yang Ge (firstname.lastname@example.org)
Feb 25 18:27
Feb 25 17:52
Feb 25 15:49
Feb 25 13:28
Feb 25 12:52
Feb 24 18:02
Feb 24 17:28
Feb 24 14:15
Feb 24 14:04
Feb 24 13:10
Feb 22 03:07
Feb 21 14:54
Feb 20 17:29
Feb 20 15:19
Feb 20 14:58
- 1Another Study Claims Wuhan Seafood Market May Not Be Source of Covid-19 Outbreak
- 2Coronavirus Friday Update: ‘No Turning Point Yet,’ Politburo Meeting Finds; Cases in Iran ‘Worrisome,’ WHO Says
- 3Coronavirus Sunday Update: Iran Reports 8 Deaths; Chinese Researchers Doubt Wuhan Virus Origin
- 4Will Warming Weather Kill Off Covid-19? Scientists Aren’t Sure
- 5 Coronavirus Saturday Update: Global Spread Accelerates as South Korea Reports 142 New Cases; Xi Jinping Thanks Bill & Melinda Gates Foundation
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas