China’s US$1.6 trillion brokerage industry braces for more pain as authorities frown at high commissions, generous compensation

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A tepid economic recovery and a brutal stock market sell-off could inflict further damage to the financials of the 11 trillion yuan sector.

Chinese brokerage firms are bracing for more pain as a tepid economic recovery and a brutal stock market sell-off could inflict further damage to the financials of the 11 trillion yuan sector. These concerns swirl even as a wave of job cuts and shutdowns has whipsawed the sector in the year to date.

Do you have questions about the biggest topics and trends from around the world? Get the answers with, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. “It’s a highly competitive industry and if you cannot meet the company’s target by the end of the year, it will be time for you to leave,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “That’s how the rules of the brokerage industry play. Given the recent performance of the stock markets, we may see more such cases [of lay-offs].”

Analysts say commission rates for institutional investors like mutual funds could potentially be cut, probably in response to the State Council’s guideline in September that encouraged brokerages and mutual funds to further cut service fees.

 

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