China's Financial Sector Consolidates Further as CICC Plans Merger With Two Brokerages

By Megan Cheah

China International Capital Corp. is planning to acquire Cinda Securities and Dongxing Securities in a move that could create a market-leading brokerage and further efforts to consolidate China's financial-services sector.

State-owned investment bank CICC wants to merge with the two smaller brokerages through a share-exchange agreement, CICC said Thursday. Cinda and Dongxing shareholders will receive newly-issued CICC shares listed in Shanghai.

Details of the agreement and pricing weren't disclosed.

Trading in CICC's Hong Kong and Shanghai shares were halted before the markets opened. Cinda and Dongxing's stocks were also suspended from trading.

Chinese authorities have been pushing for mergers in a sector that has seen sluggish deal activity and low business confidence since the pandemic.

The China Securities Regulatory Commission in March last year said it aimed to help 10 securities firms lead the industry within the next five years and hoped to build two to three brokerages that will have a global impact by 2035.

One of the biggest mergers in the space was a share-swap between Shanghai-based firms Guotai Junan Securities and Haitong Securities last year, which created an entity with 1.619 trillion yuan in assets, equivalent to $227.66 billion.

The three-way merger of the Beijing-based companies could create a "giant broker with a market-leading position", said Citi analysts Judy Zhang and Calvin Leung in a note.

The merged entity could rise to be the third largest among Chinese brokerages by revenue and fourth by assets on a pro-forma basis, based on Citi's calculations.

The deal will likely let CICC replenish capital and catch up with peers in terms of scale, they added.

While the transaction could be dilutive for CICC's Shanghai shareholders, the analysts still expect share prices of CICC and the wider Chinese broker sector to react upwards to the news.

"It indicates an acceleration of supply-side reform among China brokers, which could help fee rates to stabilize and improve brokers' return on equity over time," Zhang and Leung added.

Write to Megan Cheah at megan.cheah@wsj.com

(END) Dow Jones Newswires

November 19, 2025 22:03 ET (03:03 GMT)