HONG KONG: China plans to merge domestic broker First Capital Securities with smaller rival Capital Securities, three sources said, underscoring Beijing's determination to consolidate the brokerage industry to take on the giants of Wall Street.
China wants to level the playing field as it opens up its financial markets to foreign players including Goldman Sachs and Morgan Stanley, said two of the sources with knowledge of the matter. In addition to consolidation, China wants to build firms mighty enough to take on Wall Street behemoths in the domestic industry, which is worth 8 trillion yuan ($1.2 trillion) and has over 130 firms.
The merger strategy is being encouraged by the China Securities Regulatory Commission, the top securities regulator, the state-run China Securities Journal reported last month.
Shenzhen-listed First Capital, with a market value of $6.2 billion, plans to issue new shares to private Capital Securities in a deal valuing the smaller firm at about $1.4 billion, said one source, speaking on condition of anonymity as the information was private.
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