Chinese banks are preparing to take advantage of any easing of government restrictions to challenge the likes of Citic Securities Co (中信證券) and China International Capital Corp (中金公司) in the nation’s booming brokerage industry.
Industrial Bank Co (興業銀行) plans to acquire Huafu Securities Co (華福證券), while Bank of Communications Co (交通銀行) wants to purchase Royal Bank of Scotland Group PLC’s (RBS) stake in Hua Ying Securities Co (華英證券), people familiar with the matters said yesterday. They asked not to be identified as the deliberations are private.
The banks’ plans highlight a looming shakeup for China’s brokerages, which numbered 120 last year and have been protected for years by government restrictions on new entrants. Shares of securities firms tumbled yesterday in Chinese stock markets after the industry regulator said banks might be allowed in, while Industrial Bank rallied the most since 2013.
“Brokerages will come under heavy pressure if banks are allowed to enter,” Huatai Securities Co (華泰證券) Shenzhen-based analyst Luo Yi (羅毅) said. “It will lead to cutthroat competition, as banks control most of the financial resources.”
Industrial Bank closed 8.7 percent higher in Shanghai after Bloomberg News reported on its purchase plan. Citic, the largest Chinese brokerage by market value, slid by as much as 4.7 percent in Shanghai before closing down 1.6 percent. News of the Bank of Communication’s plan broke after the market closed.
Asia’s biggest stock market and swelling brokerage profits might be draws for banks that face challenges, including Beijing’s plans to deregulate interest rates, further intensifying competition for deposits. Citic reported a doubling of net income last year.
Chinese brokerages’ assets doubled last year to 4.09 trillion yuan (US$652.93 billion), according to the securities association, as trading volumes reached records.
While the market has fallen this year amid government efforts to rein in an explosion in margin financing, the Shanghai Composite Index remains up 65 percent for the past 12 months.
China’s securities regulator on Friday said that it was studying a proposal to let banks apply for brokerage licenses, without giving any timetable for a decision.
Bank of China Ltd is the only Chinese bank that owns a domestic securities firm, through its Hong Kong-based brokerage unit. Bank of China International (China) Ltd was established in 2002.
Industrial Bank said it is aware of the securities regulator’s announcement and is “studying a related plan,” without giving details. Spokesmen for the Bank of Communications, Hua Ying and RBS declined to comment.
Chinese brokerages accounted for 0.8 percent of China’s 192.9 trillion yuan in financial assets at the end of 2013, compared with lenders’ 78 percent share, according to central bank data.
“Allowing banks to enter the securities business will be devastating to Chinese brokers,” Capital Securities Corp (群益證券) Shanghai-based analyst Zheng Chunming (鄭春明) said. “It may be an exaggeration to draw an analogy to elephants and ants, but that gives you the idea of the impact — the damage to brokerages is significantly more than the benefit to banks.”
Zheng said that the government might be “very, very cautious in giving the approval.”
Industrial Bank and Bank of Communications would probably be among the first banks to take advantage of any opening up of the brokerage industry, China International Capital said in a report. At the same time, such a move is unlikely this year, with the government set to first allow lenders to move into areas such as investment banking, the firm said.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
RSS