China begins brokerage merger, creates R$1.6 trillion (US$$ 1.3 trillion) giant

China has begun the first phase of a plan to consolidate its state-owned brokerages. The initiative began with the merger of two Shanghai-based financial institutions, Guotai Junan Securities and Haitong Securities.

China has begun the first phase of a plan to consolidate its state-owned brokerages. The initiative began with the merger of two Shanghai-based financial institutions, Guotai Junan Securities and Haitong Securities.

The combined Guotai Junan-Haitong entity is expected to reach 1.6 trillion yuan (US$$ 226 billion) in total assets. Combined, the two companies surpass Citic Securities as China's largest brokerage.

Trading in shares of both companies was suspended on Friday (6). With the deal, Guotai Junan plans to issue new shares to investors in China from Haitong and Hong Kong-listed stocks. Guotai Junan will also issue new shares in the local market to raise funds for the deal.

In a recent statement, former vice president of Renmin University and dean of the National Academy of Financial Research, Wu Xiaoqiu, said he sees no signs of a mature stock market in China. According to him, such maturity should be reached by 2035.

Source: Forbes Brazil