Brokerages Face Declines: First-Half Profits Plummet in China's Capital Market

Friday, 30 August 2024, 06:45

Brokerages in China are witnessing a steep decline in first-half profits as market conditions deteriorate. Major firms like Citic Securities and Haitong Securities report significant decreases in earnings. The overall profit drop reflects the struggling US$8 trillion capital market amid regulatory crackdowns and reduced investor activity.
South China Morning Post
Brokerages Face Declines: First-Half Profits Plummet in China's Capital Market

Brokerages Experience Profit Declines Amid Market Challenges

In the first half of the year, profits among China's leading brokerages, including Citic Securities and Haitong Securities, fell dramatically due to unfavorable market conditions. The country’s top five brokers recorded profit reductions ranging from 6.5% to 75%, significantly impacting the entire brokerage sector.

Market Activity at Low Levels

According to analyst Sun Ting, the decrease in market activity is a major contributor to the overall decline, estimating a 24% drop in industry-wide profits. Regulatory measures aimed at shoring up market sentiment have led to a sharp decline in margin trading and short selling.

Investment Banking Revenue Hits Hard

  • New IPO values on the mainland dropped 85% compared to the previous year.
  • Average daily turnover in the market decreased by nearly 7%.
  • Investment banking revenues have suffered due to tightened regulations on new stock approvals.

The CSI 300 Index saw a 3.7% drop in the same period, indicating persistent weakness in investor confidence.

First-Half Performance Highlights

  1. Citic Securities: Profits declined 6.5% to 10.6 billion yuan.
  2. CSC Financial: Reported a 34% drop in net income to 2.86 billion yuan.
  3. Haitong Securities: Experienced a staggering 75% profit tumble.

Despite industry challenges, China Galaxy Securities managed to report a 44% increase in investment banking revenue, highlighting selective resilience amidst pervasive profit decline.

Future Outlook for Chinese Brokerages

Going forward, the performance of brokerages is expected to remain weak as reported by analyst Xu Guangfu. The government-led consolidations may offer some hope for recovery.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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