Build stronger securities brokers for financial security: CPPCC member

By Guo Yiming
0 Comment(s)Print E-mail, March 10, 2019
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Yim Fung, a CPPCC member and chairman of Guotai Junan International Holdings Ltd. [Photo by Guo Yiming/]

Yim Fung, a member of the Chinese People's Political Consultative Conference (CPPCC), the country's top political advisory body, suggests that China should build stronger and larger securities brokerages to ensure the country's financial security and stability. 

Yim is the chairman and CEO of Guotai Junan International Holdings Ltd., the Hong Kong unit of one of China's largest securities brokerages. He told that securities brokers play an important role in minimizing financial risk and stabilizing the market during times of economic wavering.

During China's continual market fluctuations in 2015, over 20 major securities brokers stepped out to buttress the ailing market, spending no less than 15 percent of their total net assets on exchange traded funds (ETF) that tracked the performance of blue chip stocks. They were asked to hold the stocks until the benchmark Shanghai Composite Index returned to above 4,500 points.

However, Yim noted, China's brokerage firms are relatively weak in scale, leverage level, capital strength, financing costs, and customer base compared to homegrown commercial banks. And its investment banking businesses are dwarfed by leading international market players, he added, saying they would be insufficient to play a key role in fending off financial risks.

Yim suggested that the government should increase investment into large, state-owned securities brokers as part of the supply-side structural reform in the financial sector. In this way, he said, they can build a multi-tiered capital market and increase the risk control capacity.

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