Merger? CICC, CGS respond

In the morning session today, the A-share brokerage sector collectively surged, with CICC and CGS, two brokerage firms with market capitalization of over a hundred billion, leading the gains. As of the close on July 31st, CGS's stock price rose by over 8%, while CICC's stock price rose by over 6%.

A rumor of a merger was interpreted by the market as the reason for the stock price fluctuations. There were rumors on some social platforms stating, "CICC and CGS are merging, the employees of these two brokerage firms probably all know, just waiting for the official announcement."

Regarding this, the Investor Relations Department of CICC responded to Shanghai Securities News, saying, "We have not received any relevant information." A person related to CGS also bluntly stated, "I haven't heard of such news, I don't know why there are rumors."

Previously Clarified Similar Rumors

CICC and CGS are both listed brokerage firms under Central Huijin Investment, and rumors about their merger have been circulating for a long time.

In November 2023, CGS and CICC had previously clarified rumors about a merger and restructuring. Both brokerage firms issued announcements stating that as of the disclosure date of the announcement, they had not received any written or oral information from government departments, regulatory agencies, or the controlling shareholders and actual controllers of the companies regarding the merger rumors.

In October last year, the high-level personnel changes at CGS and CICC were continuous, which was an important reason for market speculation about the merger of the two brokerage firms.

According to announcements from both brokerage firms around October 2023, Chen Liang was elected as the Chairman of the Board of Directors of CICC, and Chen Liang was originally the Chairman of CGS; the Board of Directors of CGS agreed for Wang Sheng to serve as the Chairman of the company, and Wang Sheng had previously held important management positions in the Investment Banking Department of CICC.

Multiple Brokerage M&A Cases in Progress

Since the beginning of this year, discussions about brokerage mergers have been ongoing. Currently, there are several brokerage M&A cases progressing simultaneously in the market.

"Zhejiang Securities + Guodu Securities"

On July 16th, Zhejiang Securities announced that the company recently received the "Administrative Licensing Application Acceptance Form" forwarded by Guodu Securities from the China Securities Regulatory Commission, indicating that the CSRC has accepted the application for the change of major shareholders and actual controllers of Guodu Securities.

"Western Securities + Guorong Securities"

On June 21st, Western Securities announced that, based on its own development needs, it is planning to acquire the controlling rights of Guorong Securities Co., Ltd. through a cash payment method. The specific proportion of the share acquisition shall be subject to the final share transfer agreement signed.

"Guolian Securities + Minsheng Securities"

On May 14th, Guolian Securities announced that the company plans to purchase 100% of Minsheng Securities through the issuance of A-shares at a price of 11.31 yuan/share from Guolian Group, Fengquanyu, and 46 other counterparties, and raise up to 2 billion yuan from no more than 35 specific investors for the development of Minsheng Securities business "Pacific Securities + Huachuang Securities"

On April 25th, Huachuang Yunxin replied to investors' questions, stating that the company will, under the guidance of regulatory authorities, promote relevant businesses in accordance with the principles of legality, market respect, and professionalism. Previously, Huachuang Yunxin announced that the board of directors had approved the "Proposal on Huachuang Securities' Intention to Acquire a Controlling Stake in Pacific Securities."

"Founder Securities + Ping An"

On March 29th, in response to market speculation about a merger with Ping An Securities, the Chairman of Founder Securities, Shi Hua, made a statement. Shi Hua said, "Founder Securities will work with all parties to maximize shareholder and investor value, and will proceed with related work in accordance with the Founder Group's restructuring investment agreement and regulatory requirements."

Regulation: Supporting Leading Institutions to Strengthen and Optimize through Mergers and Restructuring

In October last year, the Central Financial Work Conference pointed out the need to "cultivate first-class investment banks and investment institutions." In April this year, the new "Nine Articles" emphasized "supporting leading institutions to enhance their core competitiveness through mergers and reorganizations, organizational innovation, and other means."

On March 15th this year, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Securities Companies and Public Funds to Accelerate the Construction of First-Class Investment Banks and Investment Institutions (Trial)" (referred to as the "Opinions"), which not only outlined the roadmap for accelerating the construction of first-class investment banks and investment institutions but also serves as a guiding document for strengthening the supervision of securities and fund institutions and promoting the high-quality development of the industry in the future.

The "Opinions" clearly state the need to moderately expand the capital space of high-quality institutions and support leading institutions to strengthen and optimize through mergers and reorganizations, organizational innovation, and other means. Efforts will be made to establish a "textbook-style" regulatory model and industry standards in about five years, correcting the positioning of industry institutions, enhancing operational effectiveness, maintaining stable business philosophies, intensifying development models, improving corporate governance, enhancing compliance and risk control awareness, continuously optimizing industry ecology, and promoting the emergence of around 10 high-quality leading institutions to lead the industry's high-quality development.

Authors: Fei Tianyuan, Li Yuqi, Source: Shanghai Securities News, Original Title: "Merger? CICC, CGS Respond"