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Chinese Brokers Post `Ugly' January Profits Amid Rout, CICC Says

  • Combined net income for 18 brokerages sank 87% last month
  • Shanghai Composite Index plunged 23 percent in January

Chinese brokerages posted “ugly” earnings for January amid the stock market’s worst start to a year, China International Capital Corp. said.

Combined net income for 18 publicly traded brokerages plunged 87 percent in January from a year earlier to 980 million yuan ($149 million), according to CICC, which tallied up data for the month disclosed by firms including Citic Securities Co., Haitong Securities Co. and GF Securities Co.

The Shanghai Composite Index slumped 23 percent last month as economic growth concerns and policy missteps including a bungled attempt to introduce market circuit-breakers rattled investor confidence. Investors also sold Chinese stocks as expectations of a further depreciation in the yuan made domestic assets unattractive.

A steep drop in earnings from proprietary trading amid last month’s market rout was the “key culprit” for the earnings doldrums, CICC analysts Du Lijuan and Mao Junhua wrote in a note on Friday.

The profit slide may not repeat itself in coming months, the analysts said. While China’s yuan-denominated A shares may “continue to be volatile,” they won’t plunge further, they said.

Citic Securities, China’s largest brokerage by market value, blamed "volatile" market conditions for the 601 million-yuan loss it incurred in January, the firm said in a statement late Thursday, citing audited preliminary figures.

— With assistance by Aipeng Soo

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