By Jin Jing (China Daily)
Updated: 2008-01-18 10:55

Eight small and medium-sized securities companies have posted 543 percent growth in combined yearly net profit to 5.21 billion yuan ($718.62 million) in 2007, thanks to the booming stock market.

The larger brokerages, many of which are listed on the stock exchange, will post their earnings in the spring reporting season.

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Traditional brokerage services are the major contributor to securities companies' earnings. And new accounting rules have helped brokerage performances look even better.

Beijing-based Guodu Securities posted net profit of 1.2 billion yuan, while Guangxi Sealand Securities jumped 416 percent to 614 million yuan. Shanxi Securities posted an annual net profit of 820 million yuan, and Beijing Gaohua Securities 247 million yuan.

"The small and medium-sized securities companies' strong performance reflects the magnitude of the bullish stock market for the whole of 2007," said Liang Jing, an analyst at Guotai Jun'an Securities. Total turnover on both the Shanghai and Shenzhen stock exchanges amounted to 46.06 trillion yuan, up 409 percent from 2006.

New accounting rules allow brokerages to book the unrealized gains of their shareholding as income.

Securities companies' investment income also jumped in 2007. The average investment income of the eight securities firms amounted to 470 million yuan. That includes Guodu Securities at 1.07 billion yuan and Tebon Securities at 630 million yuan.

Income from underwriting also climbed, as the number of IPOs increased. A total of 779.456 billion yuan was raised through mainland IPOs in 2007.

Underwriting income from Guodu Securities amounted to 69.45 million yuan, up 1680 percent from the year before, while Tebon Securities made 52.35 million yuan.

Analysts said the larger, listed securities companies are expected to post even higher earnings as they hold greater market share.

The top 10 securities firms for brokerage services accounted for over 50 percent market share, and the top 10 in underwriting took 90 percent of the market, Guotai Jun'an Securities said.

China's largest stockbroker CITIC Securities said it expects net profit growth of over 400 percent for 2007. Shanghai-based Haitong Securities posted a net profit increase of over 700 percent to more than 5.3 billion yuan.