As we step into 2024, the landscape of the Chinese securities industry is witnessing a dramatic transformationWith the ongoing optimization of the economic structure in China and the accelerating pace of enterprises venturing abroad, many top brokerage firms are expanding their horizons into international territories, particularly in Southeast Asia and EuropeSignificant names in the industry, like Huatai Securities and CITIC Securities, have recorded remarkable revenue growth in their international operationsMeanwhile, smaller brokerages are also deepening their cross-border collaboration efforts, enhancing their competitive edge amid the rapidly evolving market dynamics.

The robust growth of these international business endeavors can be attributed to the substantial developments in China’s capital market regulations, along with an increasing level of openness in the financial sector

This has led to an uptick in cross-border investments, thus allowing leading firms to increase their contributions to parent companies markedlyFor instance, within the year, companies like Founder Securities and GF Securities have injected further capital into their overseas subsidiaries, and several brokerages have issued guarantees for bonds to bolster the market strength of their international arms.

Moreover, the pursuit of an international strategy is not just another business initiative; it has become a vital requirement for establishing a first-class investment bankDomestic brokerages are now actively participating in international capital market activities, which not only aligns with national development strategies but also facilitates Chinese enterprises in their overseas investments and operations.

The year 2024 signifies a pivotal moment for these brokerages, as there is a marked increase in domestic companies seeking listings abroad and issuing bonds in international markets

• Hang Seng Electronics Eyes Further 5% Stake
• Can Gold Prices Hold Support?
• A 12 Billion Setback: How Helitai's Missteps Hurt BYD
• Precious Metal Frenzy Ignites Stock Prices
• Tesla Surges Over 27% in Just 10 Days!

Regulatory bodies continue to refine the overseas listing mechanisms, and the process is becoming increasingly standardized, with approximately 150 companies securing outbound listing approval by the China Securities Regulatory Commission (CSRC) by late DecemberFollowing this trend, major brokerages like CICC and CITIC Securities have intensified their overseas investment commitments, demonstrating a keen interest in participating in various international IPO projects.

Data compiled by Tonghuashun indicates that by December 25, 2024, 66 companies had listed on the Hong Kong Stock Exchange, with CICC leading the way by sponsoring 17 listingsOther notable firms, including CITIC Securities and Huatai Securities, have also played key roles in bringing companies to the international market.

Representatives from CICC have explained that some brokerages are expanding their global networks to support Chinese companies in their outbound ventures while simultaneously attracting foreign investments into China

Financial demands from enterprises venturing abroad generally fall into three distinct categories: first, cross-border financing needs, which pertain to overseas equity financing and bond issuance; second, cross-border financial requirements involving mergers and acquisitions; and third, factors related to the internationalization of the RenminbiIn this context, brokerages are encouraged to explore opportunities for issuing Global Depositary Receipts and to facilitate listings on foreign exchanges.

The increasing significance of international business for domestic brokerage firms cannot go unnoticedHong Kong has emerged as a strategic "gateway" for mainland brokerages, with 14 firms having secured listings in both A-share and H-share marketsFurthermore, 36 brokerages have established international subsidiaries in Hong Kong, marking a significant expansion of their overseas footprint.

Overall, there has been a clear upward trajectory in the assets and revenue generated by offshore subsidiaries of securities firms in recent years

For example, CICC's contributions to its parent company nearly reached 50% in 2023, exceeding 55% in the first half of 2024. Additionally, Huatai Securities reported impressive international operations revenue of approximately 6.49 billion yuan in the first half of this year, reflecting a year-on-year growth rate of over 67%. Similarly, CITIC International achieved revenues of nearly 980 million U.Sdollars in the same period, showcasing significant increases compared to the previous year.

In 2024, multiple brokerage firms have actively pursued strategies to develop their international operations, which includes providing additional capital to overseas subsidiaries, supporting acquisitions of local companies, and offering guarantees for their subsidiariesFor instance, on December 18, Founder Securities announced a decision to increase its investment in Founder Hong Kong by 50 million yuan, raising the registered capital to 1.1 billion Hong Kong dollars

On September 13, GF Securities reported that its wholly-owned subsidiary had successfully issued offshore bonds worth 300 million U.Sdollars, which were backed by guarantees from GF Securities.

Industry insiders believe that providing guarantees enhances subsidiary credit ratings, ultimately improving competitiveness in the marketTo align with global practices, brokerages may opt to directly acquire companies with valuable business expertise and technology overseasFor example, on January 4, GF Securities announced the completion of a significant share acquisition in Huari Group that further solidifies its international business strategy.

Looking towards the Southeast Asian market, it has rapidly become a hotspot for Chinese brokerages, eager to capitalize on its vibrant economic landscapeOn September 20, Huatai Securities announced a milestone achievement as its subsidiary gained approval from Vietnam’s securities market regulators for a trading code, effectively securing access to two major stock exchanges in Vietnam and advancing its international strategy.

A noteworthy move occurred in 2018 when China Galaxy Securities acquired the securities business of the Malaysian CIMB Group, establishing a joint venture called Galaxy-CIMB

By December 2023, Galaxy Securities successfully acquired complete ownership of Galaxy-CIMB, further bolstering its international operations, which have seen significant growth over the past five years.

During an investor day held in December 2024, CITIC Securities International Chairman Li Chunbo emphasized the strong expansion of their international operationsThe firm has made remarkable progress beyond Hong Kong, establishing a solid service offering in countries such as India and Japan, alongside several Southeast Asian marketsMoving forward, CITIC has also indicated its intention to explore business opportunities in the Middle East.

Furthermore, domestic manufacturing, consumer, and internet companies are increasingly looking towards Southeast Asia for expansion, which presents brokerages with numerous opportunities for involvement in cross-border investments, mergers, and listings