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China's private sector has moved into the brokerage industry.
China Fanhai Holdings Co. Ltd. is the first privately held firm to become the leading shareholder in a brokerage.
It channeled 240 million yuan (US$28.92 million) into Huanghe Securities Co. Ltd. in March in return for an 18 percent stake in the Beijing-based enterprise.
On Sunday, it announced its investment and said the company's name has been changed to Minsheng Securities Co. Ltd.
"We will build Minsheng Securities into a respected securities com-pany," its chairman, Xi Chunying, promised.
Minsheng is expected to focus on small and medium-sized companies with durable growth potential.
Minsheng Securities has total capital of 1.28 billion yuan and 15 branches across the country.
Analysts said China's accession to the World Trade Organization last December has made its financial industry more open to the private sector.
"Now that China has joined the WTO, even foreign investors will be treated as the equals of Chinese companies. Our private companies should certainly be allowed to enter financial enterprises," said analyst Dai Ming of Citic Securities Co. Ltd.
But the easing of restrictions on investment in the financial industry comes at a time when brokerages' earnings have dwindled as a result of woeful showings by China's stock markets since mid-2001.
According to the China Securities Association, the country's 106 brokerage houses registered combined profit of only 6.5 billion yuan last year, down 71 percent from 2000.
The China Securities Regulatory Commission decided in May to slash commissions on the sale and purchase of stock, putting further strain on the companies. Stock broking usually accounts for nearly two-thirds of their profits.
(Shanghai Daily August 20, 2002)
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