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China’s Brokerage Stocks Rise on Profit Outlook: Shanghai Mover

Chinese brokerages rose in Shanghai and Shenzhen trading as investors bet that the industry will deliver better earnings amid a stock market recovery.

Citic Securities Co. (600030), the country’s largest brokerage by market value, jumped as much as 6.4 percent, the biggest intraday gain since Jan. 14, and traded up 6.1 percent at 13.43 yuan at 2 p.m. Second-ranked Haitong Securities Co. (600837) rose as much as 6.5 percent and Founder Securities Co. (601901), the Chinese partner of Credit Suisse Group AG’s investment banking joint venture, advanced as much as 9.4 percent.

The CSI 300 Financial Index, which tracks banks and brokerages, rose 4.6 percent, the biggest gain since March 5. China’s stocks rose the most in two weeks before a report that may show manufacturing expanded this month and as Market Studies LLC’s Tom DeMark said Shanghai’s equity index will rally as much as 28 percent by September.

“Brokerages will benefit directly when the stock market goes up,” Zhang Yanbing, an analyst at Shanghai-based Zheshang Securities Co. in Shanghai, said by telephone today. “The market is recovering from a steep downward correction.”

The recent appointment of a new chief at the country’s securities watchdog will probably help investor sentiment, Zhang said. “The regulator will maintain policy continuity and stability.”

Former Bank of China Ltd. (3988) Chairman Xiao Gang will replace Guo Shuqing as head of the China Securities Regulatory Commission, according to a person with direct knowledge of the matter. Since Guo became chairman of the securities watchdog in 2011, it has expanded foreign investor quotas to buy stocks, cut trading fees and pushed companies to increase dividends.

China will continue IPO reviews and allow companies that meet criteria to begin trading after Xiao’s appointment, China National Radio reported yesterday, citing an unidentified analyst.

To contact Bloomberg News staff for this story: Aipeng Soo in Beijing at asoo4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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