(Yicai Global) Aug. 6 -- Shares in Guangzhou Yuexiu Financial Holdings Group surged as much as 7 percent today after the state-owned holding company said it is increasing its equity in China’s largest brokerage CITIC Securities.

Yuexiu Financial’s share price [SHE: 000987] closed up 3.9 percent today at CNY11.20 (USD1.70). Earlier in the day it had reached CNY11.54.

Yuexiu Financial will invest up to HKD2.3 billion (USD296 million) to increase its holdings in Shenzhen-based CITIC Securities, the company said yesterday. It is already the second biggest shareholder with a 7 percent stake and in the first quarter bought an additional 0.8 percent shares.

The increase in holdings will consolidate Yuexiu Financial’s shareholder position in the company and bring stable returns, Guangzhou-based Yuexiu Financial said.

As China’s capital market continues to open up to the outside world, its stock market has gained, Hu Yu, a partner at Shenzhen Chengnuo Asset Management, told Yicai Global. Brokerage stocks, especially Chinese brokerages listed in Hong Kong, are in general significantly undervalued, he added.

Yuexiu Financial acquired the second largest stake in CITIC Securities after CITIC Group when its unit Guangzhou Securities merged with the brokerage last year.

CITIC Securities’ Shanghai-listed shares moved up 0.92 percent to finish at CNY23.08 (USD3.60). Its Hong Kong-listed stock [HKG:6030] dipped 0.45 percent to close at HKD17.84 (USD2.30).

Editors: Dou Shicong, Kim Taylor