Chinese brokerages launch overseas expansion drive, committing more than RMB50 billion to licences, derivatives and market-making

More than 10 Chinese brokerages have injected capital into, or disclosed plans to inject capital into, overseas subsidiaries since 2026, with the total amount exceeding RMB50 billion (about HK$58 billion), according to a tally by 21st Century Business Herald. A separate tally by CLS on October 1 put the number at at least 11 brokerages, with total commitments exceeding RMB51 billion, broadly in line with the earlier figure. It should be noted that these amounts are mostly "not exceeding" caps authorised by boards or approved by regulators, rather than sums that have already been fully paid in. The plans also combine amounts denominated in renminbi and Hong Kong dollars.

Leading brokerages have taken different approaches. CITIC Securities (600030.SH; 6030.HK) announced on May 28 that it would issue H shares to its controlling shareholder CITIC Financial Holdings at HK$23.13 per share, raising RMB16 billion (about HK$18.6 billion) for overseas operations. The issue was completed on August 6. Guotai Haitong (601211.SH; 2611.HK) announced on June 4 that it planned to inject RMB9 billion (about HK$10.5 billion) into its wholly owned subsidiary Guotai Haitong Financial Holdings, either in one tranche or several. China International Capital Corporation (601995.SH; 3908.HK) announced on August 28 that it would make a one-off RMB4.2 billion (about HK$4.9 billion) capital injection into its wholly owned subsidiary CICC International. Huatai Securities (601688.SH; 6886.HK) and China Merchants Securities (600999.SH; 6099.HK) have also announced capital injection plans of up to HK$9 billion and HK$7.6 billion respectively.

1. Domestic fees fall as overseas returns prove more attractive

Data from the Securities Association of China showed that the industry's net commission rate had fallen to 0.0171%. However, average daily turnover in A shares reached RMB2.74 trillion in the first half of the year, up 96.90% year on year and a record high. Brokerage business accounted for 35.66% of revenue, overtaking proprietary trading to become the largest source of income for brokerages. The figures indicate that domestic operations did not suffer a drain in the first half; rather, brokerages are putting more money overseas because of the growth potential and returns available there.

According to figures cited in the original report, 15 brokerages generated combined overseas business revenue of RMB34.161 billion (about HK$39.7 billion) in the first half. Revenue was highly concentrated: CITIC Securities, CICC, Guotai Haitong, Huatai Securities and GF Securities together generated about RMB29.761 billion, accounting for 86.8% of the overseas revenue of 16 comparable brokerages. CITIC Securities alone recorded overseas revenue of RMB11.788 billion, up 70.54% year on year, outpacing the 44.59% growth in its domestic business. CLS, which looked at 21 listed brokerages with international subsidiaries, found that international operations accounted for 14.1% of their combined revenue and 12.1% of combined net profit.

In terms of returns, CITIC Securities International recorded a return on equity (ROE) of 25% in 2025, compared with about 11% for the group as a whole. CICC International recorded an ROE of 15.86%. CLS reported that the latest capital injections were increasingly being directed away from merely replenishing capital for brokerage operations, towards capital-intensive businesses such as cross-border derivatives, capital intermediation and market-making.

2. Where the money is going: licences, new markets and capital strength

The first priority is licences and new markets. CITIC Securities International recently obtained a licence from the Dubai International Financial Centre (DIFC) and authorisation from the Dubai Financial Services Authority to establish a representative office. It is the second Chinese brokerage to obtain a DIFC licence; CICC's DIFC branch began operations in May 2025. Guotai Junan International (1788.HK) has signed a memorandum of understanding with the Almaty municipal government in Kazakhstan to help local companies access Hong Kong's capital market and widen their access to offshore renminbi financing.

The second priority is capital strength. Funds raised by CITIC Securities in the latest offering will mainly be used to increase the capital of CITIC Securities International, expand capital-intermediation businesses and replenish overseas operating liquidity. The stronger the capital base, the greater the scale of margin financing, derivatives and market-making operations that can be undertaken.

3. Regulatory stance and risks

The China Securities Regulatory Commission said in 2024 that it aimed to develop two to three investment banks with international competitiveness by 2035. Guolian Minsheng (601456.SH; 1456.HK) announced on September 30 that it had received a reply from the CSRC raising no objection to injecting up to RMB2 billion (about HK$2.3 billion) into Guolian Securities (Hong Kong). The capital injection can only proceed after the required filing for the overseas investment project has been completed. The research team at Kaiyuan Securities said the additional capital could expand the scale of client financing and trading businesses.

For second-tier brokerages, aggressive overseas expansion could be a double-edged sword. Overseas subsidiaries face high local compliance costs, a premium for talent remuneration and a lengthy market-building period during their early stages. If excessive funding from the parent company puts pressure on liquidity, it could weigh on the group's financial performance. Geopolitical risk also remains an uncertainty for all overseas financial institutions.

4. Three indicators to watch

The first is the proportion of "localised, non-channel revenue" generated by overseas subsidiaries. If overseas revenue mainly comes from one-off underwriting fees earned by helping mainland companies issue bonds, it remains channel-based income. A rising proportion of commissions from selling asset-management products to overseas institutions and high-net-worth clients, and from providing their day-to-day trading services, would instead point to an independent ability to generate revenue.

The second is the policy scope for cross-border asset-allocation channels, including QDII quotas and the Cross-boundary Wealth Management Connect Scheme. Mainland residents' ability to invest in overseas assets remains subject to policy restrictions, including quotas. Whether brokerages can secure larger quotas will affect their retail customer base.

The third is whether their project pipelines in Hong Kong stocks and emerging markets can convert quality projects into overseas investment-banking revenue and secondary-market market-making income.