Citic Securities Jumps 10%, Leads Gains by Brokerage Shares on Fee Rules

Citic Securities Co. rose the most in 21 months in Shanghai trading after the Securities Association of China urged the nation’s brokerages to consider total costs when setting prices and on speculation they stand to benefit from the stock market’s rebound.

Citic Securities gained 9.2 percent to 12.33 yuan in Shanghai trading at the 11:30 a.m. local time trading break, headed toward the biggest one-day gain since Jan. 14, 2009. Haitong Securities Co. rose 7.6 percent to 10.23 yuan and Huatai Securities Co. added 6.6 percent to 14.75 yuan. The benchmark Shanghai Composite Index advanced 2.4 percent to 2805.61.

The Securities Association of China urged securities companies to charge brokerage fees based on total costs in a guidance document released Oct. 7. The rule is supposed to guide securities companies away from price wars and will benefit larger securities companies with lower average costs and bigger brokerage businesses.

The Shanghai Composite has gained 19 percent from a July low on signs the nation’s economic slowdown is stabilizing.

“The new rule is a strong triggering factor, but not determining factor,” said Chen Jiantao, an analyst at China Jianyin Investment Securities Co. “Securities stocks are boosted by fundamental aspects including a strong recovery in Shanghai trading volumes since July and more money flowing into the stock market.”

The prospect China’s economic growth will accelerate prompted Moody’s Investors Service last week to say it may upgrade the nation’s debt rating within three months from the fifth-highest ranking of A1. Faster growth and the yuan’s gain to the strongest against the dollar since a peg was scrapped in July 2005 have also boosted fund inflows into China’s stock market.

--Eva Woo. Editors: Malcolm Scott, Andreea Papuc

To contact the reporter on this story: Eva Woo in Beijing at ewoo9@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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