Citic Haitong

Chinese brokers flock to capital markets

China’s brokers are rapidly raising capital for margin financing but analysts warn of dilution and regulatory scrutiny.

Citic Securities’ $4.5 billion and Haitong Securities’ $3.9 billion share placements underscore Chinese brokers’ growing need for capital to finance their rapidly expanding margin lending businesses.

However, investors should not be too optimistic in the stocks from a short-term perspective as the stock sales will dilute shareholders. In a longer term, the companies could improve the profits if they leverage the proceeds for margin financing and securities lending, said analysts. 

The share placements come amid growing bullishness among investors that mainland brokers can profit from the opening up of China's capital markets and a rally in the A-shares. Citic Securities is planning to...

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