KPMG China’s 12^th annual survey of securities companies in mainland China finds that Chinese securities companies are driving growth through business transformation, technology enablement and internationalisation, embracing the tightening trend of regulations and intensifying market competition.

This report summarises key findings from the audited annual reports of 131 securities companies in mainland China. The report notes that intensified competition and lower transaction volumes in stock market have impacted both the commission rates and income for brokerage business – income contribution declined to 28 percent from 34 percent in 2016. A similar trend was witnessed for investment banking which income has declined by 25 percent year on year. Asset management business and financing segments saw relatively stable performance. Proprietary trading overtook brokerage business to become the largest income stream of the industry.

In 2018, the securities industry of China is facing more challenges. Recent challenges include weak stock market performance, a slowing IPO market, the increased credit risk of equity pledge, and the shrunk AUM influenced by the new regulations for asset management. In view of this, many brokers are undergoing transformation and exploration in organisational structure, customer strategy, talent strategy, performance appraisal, and IT system transformation.

Separately, the report highlights that the increasing connection between the A-share market and global markets and the opening up of the securities sector to foreign companies provide both opportunities and challenges to existing players.

Read the full report for more analysis and insights.