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on september 5, guotai junan securities,haitong securitiesboth companies issued suspension announcements, planning to plan major asset restructuring, and the stocks will be suspended from september 6. this also became the first merger and restructuring of the leading securities companies since the implementation of the new "nine national regulations".

after the merger, the total assets of the new institution will exceed 1.6 trillion yuan, which may surpasscitic securitiesthe largest domestic securities firm in the world, a "super aircraft carrier" in the securities industry is about to emerge. at the same time, this merger will also provide a beneficial practice and reference for the integration and reorganization of domestic institutions in the industry in the future.

at present, shanghai is focusing on deepening the construction of the "five centers" and urgently needs to build a world-class investment bank to help build shanghai into an international financial center. the merger and reorganization of leading securities companies will become an effective way. the two securities companies are both state-owned assets in shanghai. this merger will also help optimize the layout of shanghai's financial state-owned assets and help strengthen, optimize and expand state-owned capital.

on the evening of september 5,guotai junanit was announced that the company and haitong securities are planning to merge with haitong securities by issuing a shares to all a-share exchange shareholders of haitong securities and h shares to all h-share exchange shareholders of haitong securities, and to issue a shares to raise matching funds.

recently, the central government and relevant departments have repeatedly emphasized the need to promote leading securities companies to become better and stronger.

the central financial work conference held at the end of october 2023 proposed to "accelerate the construction of a financial power", "cultivate first-class investment banks and investment institutions", and "support large state-owned financial institutions to become better and stronger."

in april this year, the state council issued the new "nine national policies", proposing to "support leading institutions to enhance their core competitiveness through mergers and acquisitions, restructuring, organizational innovation and other means."

the china securities regulatory commission also issued relevant supporting policy documents, clearly defining the goal of "forming 2 to 3 investment banks and investment institutions with international competitiveness and market leadership by 2035."

under policy guidance, the integration pace of small and medium-sized securities firms has significantly accelerated since this year, but the merger of leading securities firms has previously remained at the "rumor" stage.

the merger of guotai junan securities and haitong securities is the first merger and reorganization of leading securities firms since the implementation of the new "nine national policies". it is also the largest a+h bilateral market absorption merger in the history of china's capital market and the largest a+h integration case of listed securities firms. it involves multiple business licenses and many listed subsidiaries at home and abroad, and is a major unprecedented innovation.

based on the closing price on september 5, the total market value of guotai junan securities was 130.9 billion yuan, and the total market value of haitong securities was 114.6 billion yuan. as of june 30, guotai junan securities' total assets were approximately 898.1 billion yuan, and haitong securities' total assets were 721.4 billion yuan. if the two companies merge successfully, their total assets will reach 1.62 trillion yuan, ranking first in the industry, and a "super aircraft carrier" in the securities industry is about to emerge.

comparing the performance of the two securities companies in recent years, guotai junan has performed relatively steadily and maintained its position as a leading securities company in the industry. in the first half of 2024, the company achieved revenue of 17.07 billion yuan, ranking fourth in the industry; net profit attributable to shareholders of the parent company was 5.016 billion yuan, ranking third in the industry.

since 2022, haitong securities' performance has been declining and it has gradually withdrawn from its leading position. in the first half of this year, the company achieved revenue of 8.865 billion yuan, a year-on-year decrease of 47.76%; net profit attributable to shareholders fell 75.11% year-on-year to 953 million yuan, and its industry ranking slipped from 9th in the same period last year to 18th.

recently, mergers have frequently occurred in the securities industry. "guolian + minsheng", "ping an + founder", "zheshang + guodu" and "guoxin + wanhe" have all made new progress and attracted much attention from the market.

among them, on september 4,guosen securitiesthe company announced a plan to acquire 96.08% of vanward securities by issuing shares.guolian securitiesthe announcement showed that the company held its first extraordinary general meeting of shareholders in 2024 on the same day, and reviewed and passed with a high vote relevant proposals such as guolian securities' acquisition of minsheng securities.

"the current thinking of securities companies' mergers and acquisitions can be summarized into four aspects: solving intra-industry competition, making regional specialty securities companies bigger and stronger, integrating private securities companies with state-owned assets, and integrating securities companies under the same actual controller."shenwan hongyuanluo zuanhui, chief analyst of non-bank financial services, told our reporter that at a time when both leading securities firms and small and medium-sized securities firms are encountering their own development bottlenecks, the trend of internal mergers and acquisitions in the securities industry remains unabated. it is expected that various merger and acquisition methods will emerge in the future, including strong and weak mergers and acquisitions, reorganizations between small and medium-sized securities firms, and cross-border mergers and acquisitions. there is also the possibility of strong alliances.

tian liang, chief analyst of the financial industry at citic securities, said that the merger of guotai junan securities and haitong securities is the first m&a case among leading institutions in this cycle and the first m&a case among listed securities companies in the industry. it responds to the country's macro direction of building a first-class investment bank and promoting high-quality development of the industry. it is expected to significantly change the industry's competitive landscape in the long run and open up space for subsequent mergers and acquisitions and restructuring in the securities industry.

in addition, the securities industry's mergers and acquisitions still face the problem of insufficient license supply. luo zuanhui also bluntly stated that the phenomenon of small and medium-sized targets crossing the red line is common, and the high integration costs will affect the selection of merger and acquisition targets. at present, the securities industry's mergers and acquisitions have entered a new round of acceleration, but the possibility of a merger and acquisition wave is small. in the short term, it will still be carried out at the rhythm of "one mature case, one launched".

in june this year, shanghai municipal party secretary chen jining visited guotai junan securities and demanded that it accelerate its progress towards becoming an investment bank with international competitiveness and market influence.

the two leading securities firms are both large-scale comprehensive securities firms, each with its own characteristics in terms of business structure, digital technology, compliance and risk control, science and technology innovation finance, and international layout. guotai junan securities was established in 1999 through the merger of guotai securities and junan securities, which were founded in 1992. its comprehensive strength has long been among the top three in the industry; haitong securities was established in 1988 and is the only large securities company among the earliest established securities companies in china that has not been renamed or merged.

china everbright bankzhou maohua, a macro researcher at the financial markets department, said in an interview that the merger and reorganization of the two major securities firms reflects the pressure and challenges that the domestic macroeconomics and market competition have posed to the securities industry as a whole in recent years. the merger and integration of resources by some securities firms has its own internal driving force.

at the same time, the merger and reorganization of two large securities companies also faces great difficulties and challenges. zhou maohua said, "this not only involves the integration of resources such as management teams, business lines, and service systems, but also how to better integrate corporate culture in order to continuously improve corporate management efficiency and corporate brand image, thereby maximizing benefits and other issues."

referring to historical experience, shenyin wanguo absorbed and merged hongyuan securities,ciccafter the acquisition of cicc, the asset scale and business volume of shenwan hongyuan and cicc increased rapidly after the merger. however, during the integration process, both companies also faced difficulties in business integration, personnel integration, and cultural integration. in the medium and long term, the development results will also be different.

zhou yun, director of the state-owned capital operation research center of the shanghai national accounting institute, told our reporter that "haitong securities' performance has declined significantly in recent years, and violations have occurred frequently. this integration will help reverse the above trend. guotai junan and haitong securities are both shanghai state-owned securities companies, so integration is relatively easy. in addition, the businesses of the two securities companies are basically similar. this merger will help reduce homogeneous competition and guide securities companies to take the path of high-quality development."

since the release of document no. 19 of the state council in 2009, the construction of shanghai international financial center has always been a national strategy, carrying the historical mission of continuously improving my country's financial system construction and continuously expanding its international influence. it is currently an important part of my country's construction of a financial power.

another important background of this merger is that the two securities companies are both state-owned enterprises in shanghai. public information shows that the actual controller of guotai junan securities is shanghai international group co., ltd., and the largest shareholder of haitong securities is shanghai guosheng (group) co., ltd.

strong financial institutions and international financial centers are key elements of a strong financial country. the implementation plan for shanghai to implement the action plan for deepening and improving state-owned enterprise reform (2023-2025) clearly states that it is necessary to "support leading securities companies to strengthen business innovation, group operations, mergers and acquisitions, and build first-class investment banks." the fifth plenary session of the 12th shanghai municipal party committee proposed to "deepen the action plan for deepening and improving state-owned enterprise reform" and "focus on the construction of the 'five centers' to increase the breakthrough of reform and opening up."

liu ling, professor at the school of finance and management of shanghai university of international business and economics, said in an interview with our reporter that the merger and reorganization of the two leading securities firms, both of which are state-owned assets in shanghai, is a major measure for shanghai to respond to the "deepening of financial system reform" at the third plenary session of the 20th cpc central committee, and is also an important part of shanghai's efforts to build a "strong financial institution" in a financial powerhouse. it will not only help strengthen the orderly progress of financial supply-side structural reforms in the direction of "financial services for the real economy", but also lay the foundation for shanghai to actively explore the international development of chinese financial institutions in the future.

"the merger will be beneficial for the new institution to integrate resources, give full play to its advantages, and improve operational efficiency and international competitiveness." han qian, a professor at the lingnan college of sun yat-sen university, analyzed to our reporter that this merger is an important landmark event in the merger and reorganization of leading securities firms over the years. it is expected that similar strong alliances may occur in the future, which will have a very positive significance for enhancing the international competitiveness and influence of my country's financial institutions.

at present, the securities industry is in a trough period, which is the right time to promote industry integration. zhou yun said that domestic securities companies still have a large gap with large international investment banks in terms of size and professional capabilities. this integration can further enhance the strength of shanghai's local securities companies and also reflects the determination of shanghai's state-owned assets system to cultivate world-class investment banks.

liu ling further analyzed that the strong combination and internationalization of leading securities firms will help improve the internationalization level of market entities and the international influence of market prices, promote technological innovation in the financial market, and enhance the internationalization level of shanghai's financial industry and financial markets, thereby building a "strong international financial center" and providing a solid financial infrastructure for a "strong currency" and a "strong central bank."