China Brokerages: More Mergers, Still Fragmented

The Chinese government's ambitions to build first-class investment banks will continue to drive merger and restructuring activity among China's securities firms. S&P Global Ratings believes that combining two balance sheets is only the starting point. The benefit of synergies will take time and effort to realize. By our estimates, deals announced since late 2023 accounted for about 20% of the sector's assets based on the numbers as of end-June 2024 (see chart 1). More consolidation could eventually boost service quality, profitability as well as risk-control standards. Over the next two years, the landscape will not likely change considerably. The top players will grab a bit more market share but the sector will likely remain fragmented and competitive. The merger spree

...- A spree of mergers and acquisitions in China's brokerage sector is likely far from over. - We believe the government will encourage more consolidation to improve expertise, efficiency and global competitiveness in the sector. - This evolution will take time. The merger trend does not change our view of the sector's competitive landscape for the next two years. The Chinese government's ambitions to build first-class investment banks will continue to drive merger and restructuring activity among China's securities firms. S&P Global Ratings believes that combining two balance sheets is only the starting point. The benefit of synergies will take time and effort to realize. By our estimates, deals announced since late 2023 accounted for about 20% of the sector's assets based on the numbers as of end-June 2024 (see chart 1). More consolidation could eventually boost service quality, profitability as well as risk-control standards. Over the next two years, the landscape will not likely change...

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