CITIC Securities Company Ltd announced yesterday that it will partner with Starr International Company (SICO) to invest directly in the stock market if a ban on buying brokerages is lifted.

CITIC Securities is likely to be the first broker in China to pilot equity investment, according to an inside source.

"We just started the preparatory work for equity investment and I don't know when the securities regulator will let our company officially start the business," said Fang Qingli, a spokesman from CITIC Securities.

The two parties will begin a joint-venture company, but when it will officially start is not yet decided, said Fang.

Initial capital both companies agreed to invest will not exceed 1 billion yuan, with CITIC Securities taking a 50 percent stake, equivalent to no more than 500 million yuan, according to a statement by CITIC Securities.

The other half of the capital will be provided by a wholly owned Asian subsidiary of SICO, which currently owns four insurance companies and 16.2 percent of American International Group's stocks.

"Obviously, equity investment can bring high returns for brokerages," said one stock analyst. "And what's more it can diversify business and make returns more stable."

Equity investment has been one of the most sought-after businesses for Chinese securities companies in the past few years. But failure in equity investment by securities companies resulted in a government loan.

(China Daily January 25, 2007)