China's stock market saw a particularly bullish year – it went up approximately 80% in 2006. This is a drastic change from 2001, when the market fell into a 5-year long bear market with the Shanghai Stock Exchange slumping down to the bottom of 1092.82 in October 2005. But in 2006, the China's stock market rose unexpectedly, a culmination of factors such as the huge liquidity, booming economy, the effects of the non-tradable share reform and the ongoing restructuring of securities firms.
The booming stock market directly benefited the profitability of securities firms and the revenues of securities firms achieved fast growth whether for their brokerage or underwriting divisions. Although the overall industry saw relatively high growth in revenue on average, each firm had its own individual financial performance, especially in terms of underwriting.
To foreigners, the current booming stock market gives them an opportunity to exploit the vast potential of China's securities brokerage market. As the Chinese government resorts to influencing market forces in order to advance its financial reform roadmap, foreign institutions are set to play an increasingly active role in the sweeping restructuring of the local securities industry although the government has made the acquisition of securities firms off-limits to foreign companies. However, the reopening of the brokerage market is expected in the latter half of 2007.
This report serves to provide foreign investors with an in-depth understanding of China's securities brokerage market. It consists of nine chapters and an appendix.
Chapter One gives readers a big picture of China's stock market where securities companies derive their main revenues of commission.
Chapter Two is a business and financial review of China's securities companies.
Chapter Three elaborates on the structure of China's securities investors and their business cooperation with brokerages.
Chapter Four offers a framework of laws and regulations with regard to the industry, as well as an introduction to the regulators and related organizations.
Chapter Five breaks down the business revenues of securities brokerages and illustrates the changes in revenue structure over time.
Chapter Six demonstrates the concentration situation of the brokerage market in terms of both revenue share and regional distribution.
Chapter Seven is a review of the development of two major brokerage business models in China: the traditional outlet oriented model and the emerging but booming online trading model.
Chapter Eight introduces the financial profiles and business performance of three major market players.
Chapter Nine offers an analysis of the development trends of China's securities brokerage market in terms of industry restructuring, the transforming business model and increasing foreign participation and listings in China's stock market through back-door listings or IPOs.
Finally, a complete directory of China's securities companies, regulators and related organizations can be found in the Appendix.
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Chapter 1: China's stock market
1.1 Key events in China's stock market
1.2 Types of shares
1.3 Market overview
1.3.1 Stock market trends
1.3.2 Market cap
1.3.3 Listed companies
1.3.4 P/E ratios
1.3.5 Turnover rates
1.3.6 Shares trading
Chapter 2: China's securities firms
2.1 A brief review
2.2 Business range
2.3 Financial profile
Chapter 3: China's securities investors
3.1 Investor mix
3.2 Institutional investors
3.2.1 Securities investment fund
3.2.2 Insurance companies
3.2.3 The social security fund
3.2.4 Qualified foreign institutional investors
3.2.5 Other institutional investors
Chapter 4: Regulators and legal framework
4.1 Securities regulators and related organizations
4.2 Legal framework
Chapter 5: Profit models of securities brokerage
5.1 Overall revenue structure
5.2 Brokerage revenue structure
5.2.1 Stock trading commissions
5.2.2 Spot bond trading commissions
5.2.3 Bond repo trading commissions
5.2.4 Fund trading commissions
5.2.5 ETF trading commissions
5.2.6 Warrant trading commissions
5.2.7 Interest margin income
5.2.8 Total brokerage income
Chapter 6: Market concentration
6.1 Revenue concentration
6.2 Geographical concentration
Chapter 7: Business models of brokerages
7.1 Swollen business outlets
7.2 Booming online trading
Chapter 8: Major market players
8.1 Guotai Junan Securities Co.
8.2 Citic Securities Co.
8.3 GF Securities Co.
Chapter 9: Development trends
9.1 A sweeping restructure of the industry
9.2 Accelerated transformation of the business model
9.3 Increasing number of foreign participants
9.4 Listing in China's stock exchange through back-door listing or IPOs
Appendix: Special report: China's securities houses: a young sector struggling for survival