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Listed brokerages earn less from asset management

2019-01-23 09:50

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China's listed brokerages experienced flattening revenues and shrinking profits from their asset management business in 2018, said a report of China Securities Journal on Tuesday.

In 2018, asset management subsidiaries of 13 A-share listed brokerages saw their total revenues edge up by 0.39 percent from a year earlier to 14.07 billion yuan (2.07 billion U.S. dollars) and their profits fall by 4.64 percent year-on-year to 5.64 billion yuan (830.41 million U.S. dollars), according to data available for the twelve-month period.

Of these 13 subsidiaries, five achieved revenues above 1 billion yuan (147.1 million U.S. dollars). 

Their revenues growth was mixed. Only six of them fared better than in 2017, with Orient Securities Asset Management Company Limited, Huatai Securities Asset Management Co., Ltd. and Haitong Securities Asset Management Co., Ltd. seeing a year-on-year increase of over 10 percent. The seven others all suffered a decline.

Huatai Securities Asset Management Co., Ltd. pocketed over 1.31 billion yuan (193.15 million U.S. dollars) in net profits. Another four players all obtained net profits above 500 million yuan (73.55 million U.S. dollars).

On a year-on-year basis, only three companies obtained higher earnings, namely the subsidiaries of Orient Securities, Huatai Securities and Haitong Securities, which respectively registered a rise of 56.74 percent, 25.10 percent and 24.57 percent. 

All the ten other companies experienced a fall in profits from 2017, with four of them seeing their earnings more than halved.

Yuan Jiwei, a seasoned asset management expert, suggested two causes for their sluggish 2018 performances.

The new regulatory rules on asset management in China had dented their "channel business", or a form of shadow banking by which financial institutions channel funds from banks to their end users. Such business activities accounted for 70 percent of their operations and their shrinkage had not been offset by proactive management, which would take time to improve.

The second cause is the sluggish sales of their asset management products, which resulted from retail investors' risk-aversions as China capital market stumbled in 2018 as well as ineffective partnerships with institutional clients like banks.
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