(Yicai Global) June 26 -- CSC Financial's shares fell by the daily trading limit after Citic Securities, China's largest publicly traded brokerage, announced plans to sell most of its remaining stake in the company amid intensifying competition among the country's brokers.
CSC Financial [SHA:601066], trading as China Securities, fell 10 percent today to CNY23.80 (USD3.50). The stock has doubled in value in the past 12 months as China's financial services companies rallied.
Citic Securities will sell 427 million shares, or almost 5.6 percent, of CSC Financial via call auction or block trade in the next six months to meet operational needs, the Shenzhen-based seller said in a statement yesterday. The equity is worth CNY11.3 billion (USD1.6 billion) based on yesterday's closing price.
Despite their close ties, Citic and CSC have become rivals, Xinhua News Agency reported, citing an industry insider. Citic and China Jianyin Investment founded CSC Financial in 2005, with Citic owning 40 percent for a USD1.6 billion investment. It is still CSC's fourth-largest shareholder. But last year, CSC earned CNY3.1 billion, or nearly 29 percent of its total revenue from investment banking, topping the list of Chinese brokerages.
Beijing-based CSC listed in Shanghai last June, unbolting the lock-up period for investors this month. Investors can now sell its shares, CSC told the National Business Daily yesterday, and added it has no right to comment on why Citic is paring its holding.
The move may signal Citic's new investment plans. A Chinese company can be the controlling shareholder of just one securities firm, according to national policy. Citic cut its stake to step down as CSC's biggest shareholder in 2010.
Citic Securities' [SHA:600030] stock price fell 0.8 percent today to close at CNY23.29. The benchmark Shanghai Composite Index was off 0.2 percent.
Editor: Emmi Laine