As China Opens Up Markets, Local Brokerages Get a Helping Hand

(Bloomberg) -- As China opens some of the world’s biggest capital markets to competition from global banks, there’s a silver lining for local brokerages.

The regulator has approved five initial public offerings from companies in the industry so far this year, moving them a step closer to accessing capital from China’s $7.4 trillion equity market. Should all of them list, it’ll be the busiest year for brokerage IPOs on record, data compiled by Bloomberg show.

“China is opening up the market as well as supporting local securities companies," said Wu Kan, a fund manager at Shanshan Finance Co. “Only listing can help them boost their own valuations and improve their competitiveness."

Funds raised would come at just the right time. UBS Group AG has already submitted an application to acquire a majority stake in its Chinese venture, becoming the first global bank to take advantage of a recent rule change. Goldman Sachs Group Inc. plans to significantly increase both headcount and the amount of capital it deploys once it can get control.

The Chinese brokerages that have won approval to list so far this year are: Tianfeng Securities Co., which got the green light last week; Great Wall Securities Co., Nanjing Securities Co., CSC Financial Co. and ChinaLin Securities Co. Huaxi Securities Co. listed in February after gaining approval in December.

To contact Bloomberg News staff for this story: Amy Li in Shanghai at yli677@bloomberg.net, Cindy Wang in Taipei at hwang61@bloomberg.net.

©2018 Bloomberg L.P.

With assistance from Amy Li, Cindy Wang