Brokerages bullish on booming A-share market

Increased brokerage income boosted by the booming A-share market, together with healthy asset management business, helped swell the profits of most securities companies in China in January.

The 12 brokerages listed on the A-share market posted a combined net profit of 1.83 billion yuan ($294 million) in January, nearly equal to the figure for the entire third quarter of 2012.

As expected, the bullish outlook has prompted many brokerages to begin recruiting professionals to prepare for growth after the lean times of the past year.

"We are planning to recruit refinancing service and product design experts, as we believe the two sectors will become new growth engines," said a senior manager at Guotai Junan Securities Co Ltd.

"Indeed, the entire sector faced very hard times in 2011 and 2012, but with innovative business and policies allowing more market liquidity, better times are ahead in 2013," he said.

The number of underlying securities in the A-share market has reached 500, covering 70 percent of total value of this market, according to statistics from financial data provider Wind Information Co Ltd.

Refinancing business saw fast growth in 2012 and will become a growth engine in 2013, according to Zhao Xianghuai, an analyst with Guotai Junan Securities Co Ltd.

The balance of refinancing securities business rocketed from 12.8 billion yuan in 2010 to 89.5 billion yuan in 2012, with annual transaction volume expanding from 69.5 billion yuan to 726.6 billion yuan in 2012, according to Zhao.

By the end of January, the balance had reached 118.4 billion yuan, about 0.42 percent of the total value of the A-share market.

The total monthly transaction volume of refinancing securities business was 195.3 billion yuan in January, 4.53 percent of the transaction volume of the A-share market, according to Wind Information Co Ltd.

It is estimated the securities sector will see a total income of 188.8 billion yuan in 2013, up 46 percent year-on-year, with a net profit of 52.1 billion yuan, up 58 percent year-on-year, according to Zhao.

"Asset management and investment yields also grew rapidly in the past months. I expect that the initial public offering business will recover in the next few months," said Zhang Lei, an analyst with Citic Co Ltd.

wuyiyao@chinadaily.com.cn