Brokerages’ Hong Kong capital injections can reach billions, but GF Securities’ previous HK$52 billion plan delivered only HK$21 billion

Chinese brokerages have announced a flurry of capital injections into subsidiaries in Hong Kong and other overseas markets this year. However, most announcements refer to a board-approved ceiling of “up to” a certain amount, rather than funds that have already been received. Based on publicly available information, the capital injection plans of at least nine brokerages total more than 500 billion yuan (including projects denominated in Hong Kong dollars, equivalent to about HK$619 billion at an exchange rate of 1 yuan to HK$1.16).

Breakdown of capital injections

There can be a wide gap between “approval” and actual completion. GF Securities completed a HK$2.137 billion capital injection into GF Hong Kong in early 2025, against an original plan of HK$5.237 billion. The final amount was almost half the initial target, and the proposal can be traced back to 2018. The latest HK$6.101 billion is likewise a ceiling, with implementation expected to take place in phases.

Strong revenue growth, but not all five exceeded 70 per cent

In the first half of 2026, the five brokerages with the highest overseas revenue recorded a combined total of about RMB29.762 billion (about HK$34.5 billion), accounting for roughly 70 per cent of overseas revenue reported by all brokerages:

Only four of the five brokerages recorded growth of more than 70 per cent, with CICC reporting a 48.2 per cent increase. Guotai Haitong posted the fastest growth, which reports attributed to the continuing release of synergies following the merger between Guotai Securities and Haitong Securities. Some brokerages recorded declines during the same period: overseas revenue at Shenwan Hongyuan, Changjiang Securities and Great Wall Securities fell year on year, while China Securities’ overseas business revenue was negative RMB21 million in the first half.

Where are the high returns coming from?

CICC’s interim report showed that its overseas business had an operating profit margin of 75.3 per cent. However, this figure is based on segment reporting. During the same period, CICC International reported revenue of HK$10.471 billion and net profit of HK$4.348 billion under Hong Kong Financial Reporting Standards. The two sets of figures use different accounting bases and should not be compared directly.

A research report by China Industrial Securities said differences in capital constraints between the mainland and overseas markets, together with the higher added value of some overseas businesses, meant that overseas subsidiaries had higher leverage and return on equity than their mainland parent companies. In 2025, CITIC Securities’ overall return on equity was 10.6 per cent, compared with 25.3 per cent for CITIC Securities International.

As for the use of the new capital, CITIC Securities said the funds would be directed towards capital intermediary businesses and replenishing overseas liquidity. For China Merchants Securities, the research report said the injection would support capital-intensive overseas businesses, including derivatives, fixed income and foreign exchange products.

Regional expansion: the Middle East and Southeast Asia

CICC’s branch in the Dubai International Financial Centre (DIFC) opened on May 15, 2025. It is operated under CICC Hong Kong and holds a Category 4 licence issued by the Dubai Financial Services Authority. The company said the branch would help institutions in the Gulf region expand their business in China and work with local sovereign wealth funds and financial institutions. CMB International has also established a presence in the DIFC.

In Southeast Asia, Guotai Haitong’s interim report said its overseas branches covered 17 countries and regions as of June 30. CITIC Securities’ business covered 13 countries and more than 60 major financial markets. Its initial public offering and cross-border merger and acquisition work has expanded into Southeast Asia and Europe. In the first half, it completed 28 global merger and acquisition projects for Chinese companies, involving a transaction value of US$22.875 billion.

Risks and points to watch

The China Merchants Securities case illustrates the gap between a capital injection and existing profitability. CMS International reported revenue of RMB1.161 billion and net profit of RMB502 million in 2025, with net assets of RMB9.42 billion at year-end. The latest HK$7.6 billion injection is equivalent to about 70 per cent of its net assets. Capital-intensive businesses involve higher fixed costs, meaning a decline in revenue when market conditions deteriorate could magnify losses.

Three points merit attention:

1. Progress of capital injections: How much of each “up to” amount will actually be injected, and when the funds will arrive, will determine the gap between approval and completion. GF Securities’ previous round offers a reference point.
2. Businesses in the Middle East and Southeast Asia: The effectiveness of the expansion should be assessed through licences, the profitability of branches and the scale of partnership contracts—not the figures in capital injection announcements.
3. Growth rates and profit-margin bases: Revenue growth has already diverged among brokerages. Investors will need to examine whether high profit margins are based on segment figures or group-wide figures, depending on each company’s disclosure method.