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Oct. 15 (NBD) – The Chinese securities sector faces a downturn this year, as the A-share market continues to fall for the year.

The securities industry index of the A-share market has slid up to 41.56 percent year to date. Shares of almost all securities companies went down in 2018, prices of 12 stocks have tumbled below its net asset value per share as of last Friday. 

The slumping shares reflect the poor performance of the enterprises amid the downturn.

Last week, 10 securities companies released the monthly reports for September.

It is noteworthy that nine of these firms registered year-over-year decline in net profits and revenues last month.

Northeast Securities Co Ltd (000686.SZ), which posted the biggest drop in revenues among those companies, gained revenues of 170 million yuan (24.6 million U.S. dollars) this September, down 52.67 percent year on year. Pacific Securities Co Ltd (601099.SH) reaped 171 million yuan (24.7 million U.S. dollars) in revenues with the second biggest fall of 49.29 percent.

Of the nine companies, five saw their net profits fall over 50 percent.

Guoyuan Securities Co Ltd (000728.SZ) reported only 2.81 million yuan (406,339.5 U.S. dollars) in net income, diving 95.47 percent compared to September of 2017, and net profits of First Capital Securities Co Ltd (002797.SZ) slumped by 84.99 percent to 8.42 million yuan (1.2 million U.S. dollars) last month. 

NBD noticed that securities enterprises also announced Monday their performance forecasts for the first three quarter of 2018. 

Several firms predicted that their net profits for the period will plummet more than 50 percent from a year ago.

Sealand Securities Co Ltd (000750.SZ), for instance, said its net profits attributable to shareholders of the listed company is expected to sink by 76-77 percent to 127.1 million-133.1 million yuan (18.4 million-19.2 million U.S. dollars) in the January-September period.

The company explained that affected by various factors including the dropping stock market, shrinking turnover volume, and reduced amount of equity financing, its earnings contributed by investment banking business, brokerage business and other businesses went down, which then drove down the overall performance.

According to CSC Financial, securities stocks are forecasted to maintain low prices in the short term. But as the industry differentiation is speeding up, top securities firms with considerable capitals, a solid base of institution clients and sound risk control systems will have an edge in upgrading traditional business and obtaining licenses for innovative business. 

To improve financial performance, securities enterprises need to consider transforming their wealth management business by improving channels of service offering, expanding product portfolios, offering customized services, and satisfying demands of medium- and high-end clients, Zhao Xianghuai, analyst with Essence Securities, suggested.

 
 

Email: zhanglingxiao@nbd.com.cn

Editor: Zhang Lingxiao