Listed brokerages post 40.5% fall in net earnings
Print Edition
CHINESE listed brokerages continued to post a drop in net earnings last month due to the Spring Festival holiday and a decline in trading activity.
The combined net profits of China’s 20 listed securities firms plunged 40.5 percent from January to 5.12 billion yuan (US$817 million) in February, according to calculations by Sealand Securities. The decline accelerated from an 11 percent fall in January.
The brokerages posted a 34.6 percent month-on-month drop in total revenue to 13.78 billion yuan, according to data.
“A reduced trading volume and fewer trading days due to the weeklong Spring Festival holiday contributed to the fall in earnings,” said Kong Lingfeng, an analyst with Sealand.
The profit decline occurred as the average daily turnover on the Shanghai and Shenzhen exchanges fell 22 percent from January, eroding commission income which is one of the brokerages’ major income generators, according to Sealand.
But margin trading and short selling activities were robust last month, offsetting the slower brokerage business. The outstanding margin trading and short selling balances totaled 1.1 trillion yuan at the end of February, up 4.5 percent from January. The revenue continued to grow to a record high of 1.2 trillion yuan last week.
Haitong Securities was the most profitable brokerage with a net profit of 760 million yuan last month, followed by 550 million yuan made by CITIC Securities and 540 million yuan earned by Guosen Securities.
Year on year, the net profits of Chinese listed brokerages soared 55.7 percent in February and total revenue jumped 46 percent after China’s stock market was revived by an interest rate cut last November.
Brokerages may see stiffer competition and a tighter squeeze on profit margin after China’s securities regulator said it may allow banks to apply for brokerage licenses.
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