CITIC Securities acquires rival Guangzhou Securities

minutes 2018/12/26 10:12:49
China's News, China's Financial News, CITIC Securities; Guangzhou Securities

Dec 26, 2018 (China Knowledge) - CITIC Securities, a major Chinese security broker will be acquiring smaller rival Guangzhou Securities. CITIC will be acquiring all of the equity in Guangzhou Securities through share issuance and has already inked a deal with the latter’s shareholders.

China’s stock market has been hit hard this year and many small and medium-sized brokerages have struggled to make profits. Such mergers and acquisitions may bode well for brokerages as further consolidation may help companies to weather the storm.

At the same time, larger brokerages will also be able to capture a greater market shares through such activities.

Guangzhou Securities made a net loss of RMB 30 million on RMB 801 million of operating income during the first half of this year. Conversely, CITIC Securities managed to bring in RMB 5.6 billion of profits attributable to shareholders on RMB 20 billion of operating income during the same period.

The acquisition of Guangzhou Securities by CITIC Securities will help support the former while it will also help CITIC recapture the pole position in China’s securities market from rival Huatai Securities.

Currently, CITIC has about a 6% market share while Huatai has a 6.6% market share. Guangzhou Securities itself hold a 0.45% market share and the acquisition will bring CITIC closer to its rival Huatai.

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