(Yicai) June 6 -- Shares of Golden Dragon Development plunged after the parent of Zhongshan Securities said it would sell its full stake in the securities brokerage to speed up its business transition to data centers.

Golden Dragon [SHE: 000712] dived by the daily limit of 10 percent to close at CNY8.22 (USD1.30) in Shenzhen today.

The investment holding company intends to transfer its shares in the securities brokerage also to recover funds, the Qingyuan-based seller announced yesterday.

The sale is a response to the government's call for companies to move away from the financial industry to focus on their core businesses and the real economy, Securities Times reported today, citing a person close to Shenzhen-based Zhongshan Securities.

Golden Dragon's actual controller Yang Zhimao used to favor the financial sector as the firm held a 40 percent stake in Dongguan Securities, and a 68 percent stake in Zhongshan Securities for over a decade. Through Golden Dragon, Yang bought stakes in local banks, futures companies, and fund managers, building a small private platform for financial holdings. However, the firm has gradually transferred some of the acquired firms' licenses in recent years amid changes in the market and regulations.

It has become harder to enter the financial sector. China's main securities regulator unveiled new rules in 2019 to require the biggest shareholders of brokerages to have at least CNY50 billion (USD6.9 billion) of total assets and at least CNY20 billion of net assets. Moreover, they need to prove a track record of profits in the past five years.

However, Golden Dragon reported less than CNY20 billion in total assets late last year. None of the private placement schemes it launched since 2020 to meet the requirement worked out.

Zhongshan Securities posted a loss of CNY91.1 million (USD12.6 million) last year, narrowing from CNY180 million (USD24.8 million) in 2022, but still dragging down the parent's performance.

In April, Golden Dragon announced it is foraying into the emerging area of data centers to push for a gradual business transformation while increasing its future capabilities of turning a profit.

Editor: Emmi Laine