Chinese Futures Brokers Change Hands as Covid-19 Shakes Business(Yicai Global) May 30 -- Many shareholders of futures brokerages in China are selling their stakes as the recent outbreaks of Covid-19 adversely affect liquidity and profits sink due to difficult global market conditions amid geopolitical tensions.
Some shareholders may have to sell their equity in futures companies due to poor operations as a result of the Covid-19 flare-ups, said Cheng Xiaoyong, director of Baocheng Futures and Finance Research Institute.
Mailyard Futures’ largest investor Hubei Mailyard Share, for instance, is transferring its 45 percent stake to Zhengshan Investment, the garment maker said on May 25. And Deluxe Family is selling 40 percent of Huatai Futures to Huatai Securities for CNY1.6 billion (USD240 million) to focus on its real estate business, the firm said on May 26.
On the other hand, there have also been many changes in the shareholdings of futures brokerages for more brick-and-mortar enterprises are starting to participate in such trading as securities brokers put more emphasis on the business, Cheng said.
Some futures companies have altered their names because of shareholder changes. Zhaojin Futures is now Shandong Qisheng Futures, it said on May 20. Others, though, have seen an injection of capital. Zheshang Futures, China Futures, Huatai Futures and Galaxy Futures all reported capital increases this month.
The sector’s net profits halved last month from a year earlier and plummeted 60 percent from the previous month to CNY489 million (USD73.5 million), according to the China Futures Association. Trading volume was CNY40.8 trillion (USD6.1 trillion).
Trading volumes and yields have also plunged due to the impact of market conditions and macro factors, and the investment income of futures companies has shriveled as stock markets weakened, resulting in a sudden drop in the sector’s profits, industry insiders said.
Profitability may improve with an increase in shareholders’ capital, Jing Chuan, deputy general manager of Wuchan Zhongda Futures, told Yicai Global.
Editor: Kim Taylor
