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there has been new progress in the major merger between guotai junan securities and haitong securities.

on september 11, haitong securities held a 2024 semi-annual performance briefing. in response to investors' questions about being absorbed and merged by guotai junan, zhou jie, chairman of haitong securities, said that this reorganization was to respond to national strategies and accelerate the construction of a first-class investment bank. it was in line with the development strategies of the two companies, and would help both parties share resources, complement each other's strengths, enhance core competitiveness, and improve the ability and level of financial services to the real economy. it would help further optimize the layout of shanghai's state-owned financial assets and promote high-quality development of the capital market and the securities industry.

the chairmen of both parties expressed their views

earlier on the evening of september 5, guotai junan and haitong securities both issued announcements that guotai junan would absorb and merge haitong securities by issuing a shares to all a-share exchange shareholders of haitong securities and issuing h shares to all h-share exchange shareholders of haitong securities, and at the same time issuing a shares to raise matching funds.

on the morning of september 10, at guotai junan securities' 2024 semi-annual performance briefing, guotai junan chairman zhu jian responded to investors' concerns regarding the recent absorption and merger of haitong securities.

zhu jian said that the reorganization aims to respond to national strategies and promote the creation of a first-class investment bank. it is in line with the strategic development direction of the two companies, will help the two sides to complement each other's strengths, enhance core functions, and improve the level of financial services for the real economy, and will contribute to further optimizing the layout of shanghai's state-owned financial assets and promoting high-quality development of the securities industry.

regarding the subsequent specific integration plan and business planning, zhu jian emphasized that the specific cooperation plan for this reorganization is subject to the transaction documents further signed by both parties. in addition, this reorganization still needs to go through the necessary internal decision-making procedures and must be approved by the competent regulatory authorities before it can be formally implemented. whether it can be implemented is still uncertain.

on september 11, at the 2024 semi-annual performance briefing, zhou jie, chairman of haitong securities, also emphasized that the specific cooperation plan for this reorganization is subject to the transaction documents further signed by both parties. this reorganization still needs to go through the necessary internal decision-making procedures and must be approved by relevant regulatory authorities before it can be officially implemented. there is still uncertainty as to whether it can be implemented. regarding the subsequent progress of this reorganization, the company will strictly fulfill its information disclosure obligations in accordance with the provisions and requirements of relevant laws and regulations. for relevant information, please refer to the company's announcement published on the shanghai stock exchange website and the hong kong stock exchange's disclosure website.

market expectations for mergers are positive

the "epic" merger of the two leading securities firms coincides with the new "nine national policies" mentioned in april this year, which "support leading institutions to enhance their core competitiveness through mergers and acquisitions, restructuring, organizational innovation, etc.", as well as the china securities regulatory commission's clear goal of "forming 2 to 3 investment banks and investment institutions with international competitiveness and market leadership by 2035."

industry insiders commented that guotai junan securities and haitong securities are both large-scale comprehensive securities companies, each with its own characteristics in terms of business structure, digital technology, compliance risk control, science and technology innovation finance, and international layout. this merger will help both parties share professional capabilities and customer resources, improve intensive management level and operational efficiency. it will also help promote complementary advantages, improve the layout of key areas, industries, and regions, comprehensively enhance core competitiveness, and improve the level of service to the real economy.

tao shengyu, an analyst at donghai securities, analyzed that guotai junan recently planned to absorb and merge haitong securities to accelerate the process of industry mergers and acquisitions. there are three main points of concern in this event:

first, in terms of indicators, the total assets and net assets indicators after the merger are in an absolute leading position in the industry, and the revenue, net profit and segmented business income indicators are firmly in the top three.

second, from the perspective of business development, on the one hand, the merger can concentrate resources to empower the business, promote the mutual synergy of customer resources and business capabilities, and improve capital operation efficiency and license value; on the other hand, it can also consolidate overall capital strength, accelerate risk sorting and clearance, and promote high-quality business development.

third, from the perspective of industry trends, early mergers of securities firms were mainly aimed at promoting the improvement of the business or regional complementarity to achieve broader market coverage, expand market share, and enhance overall competitiveness. the recent acquisition of wanhe by guosen and the transfer of dongguan securities shares by jinlong securities indicate that equity integration within the state-owned assets system has begun. however, previous cases have focused more on the differentiated development framework of small and medium-sized securities firms mentioned in the new "nine national policies".

"the merger of guotai junan and haitong securities indicates that building a world-class investment bank is officially on the agenda. at the current stage, the development of innovative businesses is relatively cautious. against the background of overall low leverage ratios, the roe of domestic securities firms is significantly lower than that of international investment banks. if the capital constraints are further relaxed and the leverage ratio is improved, they will have more confidence and strength to compete with world-class investment banks. against the backdrop of accelerated integration of central enterprises and pilot mergers of leading securities firms, the demonstration effect is expected to gradually emerge, and it is worth looking forward to the actual promotion of the mature implementation of 2-3 world-class investment banks." tao shengyu said.

hua xi securities also stated that the merger of these two leading securities firms, both of which are state-owned in shanghai, will be 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 may become a typical example of mergers and acquisitions between industry institutions, further accelerating the optimization of the industry structure.

with the support of policies, market expectations for mergers and acquisitions in the securities industry are also heating up, and it is expected that more market-oriented mergers and acquisitions and restructuring will be born in the securities industry.

it is worth noting that guotai junan securities international, which was suspended due to a merger, resumed trading in hong kong yesterday. it surged by more than 13% during the session and finally closed up 6.56%.