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Brokerages' profit for 2008 shows sharp decline

THE combined profit of China's securities companies fell by 63 percent last year because of the sagging equity market.

The 107 brokerages' profit totaled 48.2 billion yuan (US$7 billion) last year, compared to the 130.7 billion yuan earned by 106 brokerages in 2007, the Securities Association of China said.

Revenue declined 56 percent to 125.1 billion yuan from a year earlier and 95 companies among them were profitable in the period, the association said on its Website.

China's benchmark CSI 300 Index tumbled nearly 70 percent last year - the world's worst-performing major stock market.

Profits at several listed securities firms, including Hong Yuan, Haitong and Guoyuan, were sharply down last year.

Hong Yuan Securities estimates its net profit could drop by about 79 percent to 437 million yuan. "Incomes from securities broking and securities investment declined sharply last year," it said in a statement to the Shenzhen Stock Exchange yesterday.

Haitong Securities, China's second-biggest brokerage by market value, said its profit last year fell almost 40 percent to 3.3 billion yuan, and Guoyuan Securities Co, the country's fifth-largest brokerage, said its profit plunged 77 percent to 52 million yuan.

The China Securities Regulatory Commission tightened approval of new share sales because of the sagging performance, which sharply reduced brokers' underwriting fees.

Brokerages earned 2.32 billion yuan in underwriting fees from IPOs in the A-share market last year, 69.58 percent down on a year earlier.

However, brokerages will be able to develop other revenue sources this year. The securities regulator is planning to let brokers start margin-lending and short-selling businesses which could earn them 6.6 billion yuan this year.


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