Brokers Rise as China Pledges Bigger Market Role: Shanghai Mover

Citic Securities Co. paced gains in Chinese brokerages in Shanghai trading amid speculation that they will benefit from pledges by Communist Party leaders to give market forces a bigger role in the economy.

Citic Securities, China’s largest brokerage by market value, climbed 7 percent, the most in two months, to 11.66 yuan at 2:07 p.m. Second-ranked Haitong Securities Co. (600837) jumped as much as 10 percent, the biggest intraday gain since July. The Shanghai Composite Index (SHCOMP) rose 2 percent.

The nation will make markets “decisive” in allocating resources, according to a communique released Nov. 12 from the third full meeting, or plenum, of the party’s 18th Central Committee in Beijing. Capital markets will usher in a rare opportunity to grow as the plenum outlined the direction for reform and development, Xiao Gang, chairman of the China Securities Regulatory Commission, said in a statement yesterday.

“Investors are upbeat after the plenum,” He Zongyan, an analyst at Shenyin & Wanguo Securities Co. in Shanghai, said by phone. “While it’s unclear now which sectors are going to benefit directly, brokerages will be a beneficiary eventually if the stock market does well.”

The Shanghai Composite, whose biggest members include state-owned enterprises such as Industrial & Commercial Bank of China Ltd. and China Petroleum & Chemical Corp., has lost about 28 percent over the past three years, while the ChiNext index of smaller, non-state companies has gained about 18 percent.

“The forcefulness as well as the breadth and depth of the reform are worth looking forward to,” Shi Weixiang, an analyst at Guotai Junan Securities Co., wrote in a note today. “State-owned companies will experience the immediate impact of it and the pace of reform in other sectors could exceed expectations.”

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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