Chinese Financial Services Shares Gain on Consolidation Hopes

By Jiahui Huang

Shares of several Chinese financial services companies traded higher in the mainland and in Hong Kong on Friday on expectations that the sector may see consolidation after state-run Guolian Securities announced its intention to buy another smaller firm.

Guolian, which has a market capitalization of $3.66 billion in Hong Kong, said late Thursday that it intends to take a controlling 95.5% stake in an unlisted state-run financial services company, Minsheng Securities. Guolian currently has an over 30% stake in the firm.

Separately, the State Council of the People's Republic of China, the country's top policy-making body, said late Thursday that it would promote the strengthening of leading securities companies as part of the government's efforts to strengthen the domestic financial market, also fuelled the speculation.

The State Council said the moves were also aimed at bringing the Shanghai and Shenzhen Stock exchanges in line with global peers that house big financial services companies on their respective bourses.

Guolian's shares were up 15.25% to 3.40 Hong Kong dollars (US$0.43) at midday Friday, putting it on track for its biggest single-day gain since August 2023. Shares of the company are halted on the Shanghai stock exchange.

The acquisition will help Guolian Securities increase its net assets and make it more competitive in the sector, Founder Securities analyst Xu Qishan said in a note.

Big names such as CITIC Securities, China Galaxy Securities, Huatai Securities all gained more than 5% while Haitong Securities and Guotai Junan Securities rose 3.8% and 2.5%, respectively in Hong Kong. The securities stocks in mainland also rose. Founder Securities and China Galaxy Securities, up 6.3% and 4.6%, respectively in mainland, were among the top gainers on the CSI300 index.

The China Securities Regulatory Commission said in March that it aims to help ten securities to lead the industry within the next five years and hopes to build two to three brokerages that have a global impact by 2035. It also said earlier this year that it intends to push the Shanghai and Shenzhen stock exchanges to adopt global standards.

The Commission relaxed standards of exchange-traded-funded products under the stock connects between the Hong Kong, Shanghai and Shenzhen exchanges last week.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

April 26, 2024 01:23 ET (05:23 GMT)

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