China's securities regulator has urged the nation's brokerage industry to rev up the pace of cultivating top investment banks capable of competing on the global stage and better facilitate Beijing's technological self-reliance drive as outlined in a critical five-year plan by the Communist Party.

Securities companies should redouble efforts to fulfil the goal set by Beijing of building China into a global financial powerhouse, while serving the tech self-reliance strategy by facilitating fundraising and mergers in sectors ranging from artificial intelligence to biopharmaceuticals and green energy, said Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), in a speech posted on the regulator's website over the weekend. The speech was delivered at a meeting organised by the Securities Association of China.

The CSRC would also ease restrictions on large and high-quality securities companies, allowing them greater access to leverage and capital, while applying differentiated criteria to smaller and foreign-invested firms in terms of ratings and business entry requirements, Wu said.

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Wu's remarks offer an insight into how China's 14.5 trillion yuan (US$2.05 trillion) brokerage industry would develop and aid economic growth as the world's second-largest economy shifted from credit-fuelled investments to technology as its new driver. Beijing laid out the goal of establishing several world-class investment banks in a document promulgated by the State Council in 2024, as competition between China and the US expanded from tech and trade to areas including finance and military defence.

The brokerage industry has seen a slew of prominent mergers and acquisitions over the past year. Photo: Reuters alt=The brokerage industry has seen a slew of prominent mergers and acquisitions over the past year. Photo: Reuters>

A gauge of 53 mainland-listed brokerages rose 1.6 per cent on Monday on expectations of further industry consolidation, compared with a 0.8 per cent gain in the CSI 300 Index, according to financial data provider Shanghai DZH.

The brokerage industry has already seen a slew of prominent mergers and acquisitions over the past year. Guotai Junan Securities absorbed Haitong Securities last year to create the nation's second-biggest brokerage. China International Capital Corp said last month that it would take over two smaller rivals, creating a 1 trillion yuan new entity that would leap to fourth place by total assets.

China currently has 107 securities firms that serve 240 million clients, according to the CSRC. They had helped about 1,200 technology companies go public over the past four years and arranged equity and debt financing worth more than 51 trillion yuan, including 2.5 trillion yuan in bond sales for tech innovation and clean energy, the CSRC said. During the same period, the industry's total assets increased 60 per cent to almost 15 trillion yuan, while net assets rose 40 per cent to 3.3 trillion yuan.

Brokerages must act as gatekeepers, supervising issuers of initial public offerings and guiding listed companies to operate within rules while enhancing shareholder value, Wu said. He called for evaluation systems that prioritise investor returns and urged firms to tap household investment demand, adding that domestic households allocate only 15 per cent of their assets to stocks and funds.

The industry should also cultivate a positive image, Wu said, warning against hedonism and wealth-flaunting amid a flurry of incidents that went viral and sparked public backlash.

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